IT: Business and Consumer Confidence

Tue Apr 24 03:00:00 CDT 2018

Consensus Actual Previous Revised
Mfg. Conf. Level 108.5 107.7 109.1 103.9
Cons. Conf. Level 116.9 117.1 117.5
Bus. Conf. Level 105.1 106.0 105.9

Business confidence deteriorated again in April according to the new Istat survey. At 105.1, the economy-wide measure was down 0.8 points versus its revised March reading and at its lowest level so far in 2018.

The fall in the headline index was partly due to manufacturing where the sector sentiment index dropped 1.2 points to 107.7, its second consecutive fall and its weakest mark since May last year. However, morale also declined in services (106.4 after 107.2) and, in particular, retail (97.5 after 105.0). Significantly, the retail print was the worst since January 2017 and bodes ominously for already weak household spending.

Meantime, consumer confidence similarly worsened although, at 117.1 after 117.5, it remained historically firm. Inflation expectations also eased to their softest level since December 2017.

The overall tone of today's survey is disappointingly soft and probably points to another fall in the composite output index this month. As such, it looks as if the Italian economy started the current quarter on a less than solid footing.

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.