The Italian economy appears to have remained in the doldrums in September, with the government's business confidence index slumping to 104.9 in September from 106.7 in August (revised lower from the previously reported 106.8).

Manufacturing confidence also weakened, falling to 96.4, undershooting the consensus estimate of 98.0. That's below the downwardly revised 97.7 in August (a touch lower than the previous estimate of 97.8) and suggests industrial output contracted again in September after five straight monthly declines.

Meanwhile, consumer confidence also softened, falling to 105.4 in September, short of the consensus forecast of 106.0, down from an unrevised 106.5 in August.

That takes the Italian RPI to positive one from positive six previously, while the RPI-P swung to negative 13, from negative six previously.

The data come amid growing evidence of an economic slowdown, reversing a burst of growth at the start of the year.

On Wednesday, the Italian government admitted that gross domestic product is likely to expand by just 0.8 percent this year, down from a previous forecast of 1.0 percent. But meeting even that downgraded prediction could be a challenge, after the economy contracted by 0.4 percent in the second quarter.

Italy has little scope for stimulus measures, with the budget deficit likely to hit 5.3 percent of gross domestic product this year; that's up from a previous estimate of 4.5 percent, according to updated forecasts released on Wednesday.

Confidence in manufacturing is seen edging up from 97.8 while its consumer sector counterpart falls from 106.5 to 106.0.

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.