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Economy in Brief

Consumers Fret Over Economic Situation in Italy & Netherlands
by Carol Stone June 23, 2005

Consumer confidence has eroded in Italy this month, with a decline of 1.4 percentage points in the ISAE indicator to 102.9 from 104.3 in May (seasonally adjusted, 1980=100). Concern over the overall economic situation is the broad source of discomfort, as people's assessment of the "general economic situation" dropped to 76.0 from 83.9 last month. While total confidence remains stronger than 2004 levels, the "general" indicator has fallen below last year's range.

At the same time, people see their own economic situations as holding up -- or at least not worsening as severely. The "personal situation" gauge climbed 1.8 points to 117.1, the highest level since September 2002. Associated survey items, such as household finances and financial expectations are moving in a narrow range, and buying attitudes toward major purchases and ability to save are actually improving. Attitudes about job prospects are mixed. This survey sees unemployment going higher, but new regulations give employers more flexibility about using temporary and part-time workers, so there is uncertainty about their implication for the number of jobs and the financial implications.

These considerations accompany the uncertainty over the EU constitution and the rise in energy costs. Perhaps the surprising thing about this survey is that its final outcome wasn't lower.

In the Netherlands, consumer confidence did drop more sharply, to -26 this month from -22 in May and -16 in April. The components here show the same pattern as in Italy, however, as the macro indicator, "economic climate" plunged to -30 from -22 in May and -8 in April. The "willingness to buy" indicator has been fairly stable, with -23 this month after -22 in May and -20 in April. The deterioration in these data break an improving trend that had run from mid-2003 to this spring, just before the vote over the EU constitution. This too suggests that consumers' worries are more over political uncertainties that about their own economic situation. Not though, please note, that they are optimistic about that, but just that their distress is less intense.

Italy(Index, 1980=100) June 2005 May 2005 June 2004 2004 2003 2002
  Consumer Confidence Indicator 102.9 104.3 100.1 101.4 106.1 115.8
  General Economic Situation 76.0 83.9 89.0 88.6 91.4 105.2
  Personal Economic Situation 117.1 115.3 106.5 107.9 113.5 121.1
  Consumer Confidence Survey 
(% balance)
-26 -22 -25 -25 -35 -25
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