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Economy in Brief

Consumer Confidence Recovers In Italy
by Robert Brusca  June 24, 2009

Consumer confidence in Italy has risen firmly in June. Confidence now has risen in five of the past seven months having fallen in only one of those months. The trend to improvement is clear. The overall confidence measure from ISAE is not in the 35th percentile of its range- still quiet weak but not so disastrous.

The overall situation in the past 12 months is given a rating of -68 which sounds terrible. Actually that reading is in the 55th percentile of its range of historic outcomes and stands above the average response of -71. For the next 12-months the rating is in the 40th percentile of range and is only slightly below the average response for that category. It’s a return to sub-normalcy.

The ability to make major purchase right now is at the index average, but the mid point of its range at the 43.9th range percentile. For the future the response rate is a super strong 95th percentile reading.

Despite this improved news, fears of unemployment still rate high in 66th percentile of their range but even higher when we look at the ranking percentile. The latter measure tells how many responses are below the current response: that percentage is 96.2%. In other words, unemployment fears are worse than this only about FOUR percent of the time. Still the range reading tells us that there have been times when the fears were much, much, greater. The ranking percentile says yes, that maybe so, but there have not been many of those times. We can compare the ranking and the range percentiles for each response to get a better fix on what the raw responses man. Cleary the raw responses taken alone can be very misleading across categories.

As you can tell by surveying these responses and looking at the percentile ranges or rankings each category has its individual distribution of responses. Over the past 200-some months the overall situation reading averages a -71 reading while the ‘overall situation for the next 12-months’ averages a -9. Go figure. Are 12-monht periods usually that different? I don’t think so. We use the percentile and range readings to try to shift though these responses to get a more accurate assessment of the consumer’s mood.

For now it is apparent that there is an improvement in the Italian consumer’s mood, and also some paradox. There is still a high fear of unemployment but apparently the social safety network is good enough that is not raising a lot of anxiety about the future or even about the ability to spend on consumer items. That may seem unusual but after all this is Europe and it’s Italy. Those are simply the facts.

Italy ISAE Consumer Confidence
  Since Jan 1992 Rank
  Jun-09 May-09 Apr-09 Mar-09 Percentile Rank percentile
Consumer Confidence 105.4 104.9 104.9 99.9 35.0 148 28.8%
Last 12 months
  OVERALL SITUATION -68 -73 -74 -84 63.2 93 55.3%
  PRICE TRENDS -40.5 -45 -43 -45 9.3 205 1.4%
Next 12months
  OVERALL SITUATION -8 -17 -26 -35 49.2 123 40.9% 
  PRICE TRENDS 8.5 10 9.5 7 17.3 101 51.4%
  UNEMPLOYMENT 15 17 21 38 66.2 8 96.2%
  HOUSEHOLD BUDGET 0 5 1 5 15.6 200 3.8%
  Last 12 months -37 -34 -37 -39 38.8 126 39.4%
  Next12 months -4 -5 -11 -10 63.3 117 43.8%
  Current 60 59 60 69 72.7 13 93.8%
  Future -25 -29 -29 -33 51.1 145 30.3%
MAJOR Purchases
  Current -39 -43 -41 -43 43.9 90 56.7%
  Future 3 1 3 3 95.7 3 98.6%
Total number of months: 208
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