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Economy in Brief

Italy's Consumer Confidence Backs Off Again
by Robert Brusca June 24, 2008

Consumer confidence in Italy in June fell back to a raw reading of 100 after its unexpected spurt to 103.2 in May. As a result it is back near its April level of 99 and ensconced at a range percentile reading of 9.8. That is the reading stands in the bottom 10 percent of its range of values since January of 1999.

If we take the headline of the confidence measure back in time to 1991 (not all components go back in time as far), we find that it stands in the bottom 9% of all observations over that longer sample period. There is no disputing that confidence in Italy is low. 100 is not a normal reading.

The components of the index are at low percentile in their respective ranges with a few as really obvious exceptions. The prospect for unemployment has risen to the 64th percentile (nearly the top THIRD of its range). The overall situation over the last 12-months grades out as being in the bottom five percentile of its range; for the next twelve some improvement is expected as the measure stands in the bottom 36 percentile of its range. Price trends were in the 59th percentile over the last twelve months and are expected to be essentially at the 40th range percentile in the next 12-months. The household budget in the next 12-months is shot, standing on the bottom five percent of its range.

The households’ overall financial situation was and remains bleak. In the past 12 months households rated their financial situation as in the bottom 2 percentile of its range; in the next twelve months it rates at the bottom 3 percentile -- not exactly a party.

The time for major purchases is rated as the WORST EVER currently. And it is expected to improve only to the bottom 12 percentile in the next 12months.

In the current situation savings behavior is called very likely- a probable response to the financial uncertainty and to the fact that is rated as the worst time to buy. So if you do not buy or spend, you save. In the period ahead the savings environment is in the bottom 25 percentile of its range.

For Italy the consumer situation remains in distress. The past twelve months are rated as terrible by consumers. The period ahead is expected to be still challenging but to show some improvement. It is hard to say if this is hopeful thinking or a true expected outcome.

Italy ISAE Consumer Confidence
          Since January 1999
  Jun-08 May-08 Apr-08 Mar-08 Percentile Rank
Consumer Confidence 100 103.2 99.8 99 9.8 109
Last 12 months
OVERALL SITUATION -82 -81 -85 -84 4.8 111
PRICE TRENDS -11 -15 -17 -17.5 59.2 52
Next 12months
OVERALL SITUATION -16 -9 -28 -35 36.5 55
PRICE TRENDS 19.5 19 20 23 39.8 57
UNEMPLOYMENT -5 -3 3 6 64.1 59
HOUSEHOLD BUDGET -1 -3 0 -2 5.6 110
HOUSEHOLD FIN SITUATION
Last 12 months -55 -53 -56 -55 2.0 112
Next12 months -15 -10 -14 -16 3.3 113
HOUSEHOLD SAVINGS
Current 73 68 58 54 100.0 1
Future -38 -38 -48 -45 25.6 107
MAJOR Purchases
Current -64 -51 -47 -50 0.0 114
Future -69 -56 -58 -65 12.9 96
  Total number of months: 114    
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