IT: Business and Consumer Confidence

Tue Mar 27 03:00:00 CDT 2018

Consensus Actual Previous Revised
Mfg. Conf. Level 109.9 109.1 110.6 110.4
Cons. Conf. Level 115.0 117.5 115.6 115.7
Bus. Conf. Level 106.0 108.7 108.5

Business sentiment was unexpectedly soft in March. The new Istat survey put overall sentiment at 106.0, down some 2.5 points from a slightly weaker revised February mark and its second lowest reading since July last year.

The headline fall was in part attributable to a more cautious manufacturing sector where morale fell 1.3 points to 109.1, a 7-month trough. Services (107.2 after 109.8) similarly saw a sizeable decline but retail (105.3) at least held steady and construction (132.6 after 132.0) managed a small improvement.

Meantime, consumer confidence was very robust this month. At 117.5, the sentiment gauge was up 1.8 points versus a marginally firmer revised mid-quarter print and at its highest level since January 2016. However, amongst the good news there was also a decline in inflation expectations (minus 8.9 after minus 1.9) which dropped to their lowest mark so far this year.

The March results are clearly mixed. The business figures are in keeping with the slowdown in activity found in the flash PMI survey but the pick-up in consumer confidence is very welcome. So long as this equates with a much-needed strengthening in household spending, the negative implications for economic growth should be limited.

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.