Overall business confidence continued to improve at the start of the year. At 98.1, the headline index was up from 97.3 in December to hit its highest level since last April. The gauge has now risen 4.2 points since its recent low in November. Note that the January update includes a rebasing of the survey data from 2010 =100 to 2021=100.

Confidence in manufacturing (88.3 after 87.3) also unexpectedly improved for the first time since March 2023. Even so, while January's print matched the strongest since last August, it remained well below its historic norm. The sector is still facing weak demand. Elsewhere, retail trade (106.6 after 104.0), services (102.6 after 102.4) and construction (107.0 after 106.7) all posted fresh gains too.

At the same time, consumer confidence (96.4 after 95.8) similarly edged firmer. Since hitting a low of 91.1 in October, household sentiment has steadily improved and the January reading was a 7-month peak.

The unexpected upturn in confidence in both the manufacturing and consumer sectors may mean that the equally surprising positive handle to fourth quarter GDP growth may be repeated in the current period. That said, with the Italian RPI at minus 11 and the RPI-P at 6, overall economic activity is currently only running broadly in line with forecasts.

Manufacturing confidence is seen slipping to 95.0 and its consumer sector counterpart to 106.0. Today's update will include a switch to a new base year.

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.