IT: Business and Consumer Confidence

Wed Jun 27 03:00:00 CDT 2018

Consensus Actual Previous Revised
Mfg. Conf. Level 106.9 106.9 107.7 107.6
Cons. Conf. Level 113.2 116.2 113.7 113.9
Bus. Conf. Level 105.4 104.7 104.6

Overall business sentiment saw a slight improvement in June. At 105.4, the headline index was up 0.8 points versus its marginally weaker revised May print and at a 3-month high.

However, the upturn masked a further deterioration in manufacturing morale (106.9 after 107.6) which fell to a 16-month low as well as a further worsening in construction sector confidence (132.9 after 134.1). Rather, it reflected more optimistic sentiment in services (107.8 after 106.0) and a second successive sizeable gain in retail (103.9 after 100.1).

Meantime, there was surprisingly good news on the consumer sector where confidence advanced 2.3 points to 116.2. The gain here failed to reverse May's 3.1 point decline but still left a level close to March's multi-year high.

In sum the Istat report offers mixed signals for the upcoming June PMI survey. Manufacturing would seem to have slowed further but business activity in services looks to have held up much better. This may equate with little change in the composite output index which, in turn, would suggest another quarter of only sluggish economic growth.

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.