IT: Business and Consumer Confidence

Tue Jan 30 03:00:00 CST 2018

Consensus Actual Previous Revised
Mfg. Conf. Level 110.3 109.9 110.5 110.3
Cons. Conf. Level 116.3 115.5 116.6 116.5
Bus. Conf. Level 105.6 108.9 108.7

Business sentiment deteriorated at the start of the year according to Istat's new survey. At 105.6, the overall confidence measure was more than 3 points short of its minimally weaker revised December reading and equalled its lowest mark since last March.

The headline drop in part reflected worsening morale in manufacturing (109.9 after 110.3), which saw a 5-month trough due to softer current output and orders. However, services (105.7 after 108.7) and retail (108.6 after 112.0) similarly posted significant declines leaving construction (129.2 after 127.1) as the only sector to register an improvement.

Consumer confidence (115.5 after 116.5) was also less positive but this at least followed a tidy upward revision to December and January's print remained well within the recent range. Of note, there was a sharp increase in household inflation expectations (22.0 after minus 14.7) although this may simply reflect higher energy prices.

Istat's findings warn of a possible drop in both the January manufacturing and service sector PMIs.

The Italian statistics office (Istat) conducts business and consumer confidence surveys over the first fifteen and ten working days of each reference month respectively. These provide information about current and expected developments in key sector variables. The largely qualitative results are synthesized for each survey into a single number that provides an overall measure of sentiment. Business confidence reflects the combined results of separate surveys covering manufacturing, retail, construction and services.

If investors want to know how the business or consumer sectors are performing as they evaluate their investment decisions, they can find timely and in depth information in the latest Istat surveys. Although short-term swings can be erratic, changes in trends in confidence can contain very useful information about a sector’s underlying health well in advance of the release of the official data. Moreover, by including some forward-looking components (e.g. manufacturing orders or consumer buying intentions) the Istat surveys can also provide a potential insight into prospective developments.