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Economy in Brief

Confidence, Still Weak, Makes Sharp Jump
by Robert Brusca May 22, 2008

Italy’s economy continues to be under pressure. Confindustria, the employers association, is looking for GDP to drop in Q2. Prime Minter Berlusconi has offered selected tax cuts to try and stimulate the moribund economy. Retail sales fell sharply in March. Yet, in May consumer confidence rose to highest reading of the year – it was a huge surprise. The assessment of the overall situation in the next 12 months improved very sharply to -9 from -28. The overall situation for the last 12-months improved to -81 from -84 and is still weaker than its -78 reading in January. The prospect of unemployment lessened in May. The environment for savings both current and future assessments improved sharply. The environment for major purchases in the future improved marginally.

The improvement in sentiment is surprising even after looking at the survey. While PM Berlusconi has announced policy moves geared to help spur output, this came after the survey. Italy’s economy is continuing to fade, from the production to the consumption side. . The improvement in consumer sentiment is still a bit of a mystery and it is doubtful that it will be able to extend itself, but that is matter for next month.

Italy ISAE Consumer Confidence
          Since January 1999
  Mar
08
Feb
08
Jan
08
Dec
07
%tile Rank Max Min Range Mean
Consumer Confidence 99 102.8 102.2 106.7 6.1 108 127 97 30 111
Last 12 months
OVERALL SITUATION -84 -76 -79 -69 0.0 111 -22 -84 62 -55
PRICE TRENDS -17.5 -18 -23 -21.5 40.8 61 4 -32 36 -15
Next 12months
OVERALL SITUATION -35 -31 -39 -35 6.3 108 24 -39 63 -13
PRICE TRENDS 23 22 24.5 28 38.1 55 49 7 42 24
UNEMPLOYMENT 6 5 -2 4 92.3 6 9 -30 39 -5
HOUSEHOLD BUDGET -2 -3 1 9 2.8 110 33 -3 36 14
HOUSEHOLD FIN SITUATION
Last 12 months -55 -53 -46 -44 0.0 111 -7 -55 48 -29
Next12 months -16 -12 -14 -14 0.0 111 14 -16 30 -1
HOUSEHOLD SAVINGS
Current 54 61 53 60 79.1 11 63 20 43 39
Future -45 -42 -35 -37 0.0 111 -9 -45 36 -23
MAJOR Purchases
Current -50 -44 -42 -47 16.7 89 -15 -57 42 -40
Future -65 -61 -53 -61 25.8 65 -42 -73 31 -62
  Total number of months: 111            
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