Italian Business and Consumer Confidence Decline Once More in September Amid Weakening Economy

29 Sep, 2023

Italian Business and Consumer Confidence Decline Once More in September Amid Weakening Economy

Italian businesses and consumers faced a further erosion of morale in September, reflecting a growing sense of economic fragility in the eurozone's third-largest economy, according to recent data.

The National statistics institute ISTAT reported that its manufacturing confidence index dipped to 96.4 in September, down from 97.7 in the previous month. This figure fell short of the median forecast of 97.8 in a Reuters survey involving 10 analysts. The September reading marked the lowest point since November 2020, a period marred by the initial impact of the COVID-19 pandemic.

ISTAT's composite business morale index, which aggregates data from the manufacturing, retail, construction, and services sectors, also experienced a decline. It dropped to 104.9 in September, compared to August's reading of 106.7, marking its lowest level since October of the preceding year. Notably, sentiment weakened across all business sectors in September, except for the construction sector, which bucked the trend, as reported by ISTAT.

Consumer confidence in Italy witnessed a decline as well, with a drop from 106.5 in August to 105.4 in September. This fall was broadly in line with the median forecast of 105.5 in a Reuters poll.

These deteriorating confidence levels coincide with Italy's economic struggles. In the second quarter, Italian gross domestic product (GDP) contracted by 0.4% compared to the previous three months. Most analysts anticipate continued economic weakness in the latter half of the year.

Furthermore, the government recently adjusted its GDP growth projections for this year, revising the forecast down to 0.8% from the 1% estimate made in April. The outlook for 2024 has also been trimmed to 1.2%, down from the previous 1.5% expectation.

As Italy grapples with these economic challenges, monitoring indicators such as business and consumer morale provides crucial insights into the ongoing economic climate and its potential impact on future growth.