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Economy in Brief

Italian Business Confidence Advances...But Still Lags
by Robert Brusca December 29, 2009

Italian business confidence is shooting up strongly but still clings to relatively weak absolute readings. The level of the current reading stands in the 52nd percentile of the range of values occupied since October of 1996. But by rank the current index stands 136th out of 159 readings or in the bottom 12 percentile of all readings over that same span. That is not a very reassuring statistic despite the rise in the index this month. This percentile rank-in-queue measure is uniformly weak across the various components this month. Unfortunately inventories have the highest reading within each commodity category. Of all commodity types consumer goods are doing the best while investment goods and intermediates goods are lagging nearly equally.

The graphic below shows the strength of the current surge depicting both the absolute level of the index and its percentage rise on the same graph. We can hope that the rise continues and that it will bolster the level reading further. But for the rest of the e-Zone a good deal of pessimism remains.

France’s final GDP figure confirms the weak rise in GDP in Q3 although it does show two quarterly gains in a row. In the UK private forecasters have reaffirmed their view of slow growth in the UK for the year to come. Italy’s business survey results seem to fit snugly into this grouping of reports that shows some improvement but still no gusto.

Italy ISAE Business Sentiment
  Since Oct 1996  
  Dec-09 Nov-09 Oct-09 Sep-09 Percentile Rank Rank%
Biz Confidence 82.6 79.4 77.8 74.6 52.0 139 12.7%
TOTAL INDUSTRY
   Order books & Demand
     Total -40 -47 -50 -52 33.8 146 8.2%
     Domestic -41 -47 -49 -49 35.8 146 8.2%
     Foreign -41 -49 -54 -55 35.8 146 8.2%
     Inventories -2 -2 -3 1 37.5 125 21.5%
     Production -38 -45 -49 -47 28.6 147 7.6%
INTERMEDIATE
   Order books & Demand
     Total -52 -55 -57 -55 26.8 146 8.2%
     Domestic -53 -55 -57 -54 27.4 146 8.2%
     Foreign -49 -56 -56 -59 31.6 146 8.2%
     Inventories -4 -6 -7 -1 37.9 113 29.1%
     Production -48 -51 -52 -51 25.0 147 7.6%
INVESTMENT GOODS
   Order books & Demand
     Total -45 -56 -62 -61 26.7 146 8.2%
     Domestic -45 -54 -54 -55 30.0 146 8.2%
     Foreign -48 -54 -66 -61 25.3 147 7.6%
     Inventories -3 0 -1 -1 36.8 111 30.4%
     Production -45 -52 -61 -58 21.6 147 7.6%
CONSUMER GOODS
   Order books & Demand
     Total -23 -32 -36 -38 44.9 133 16.5%
     Domestic -23 -32 -36 -39 50.0 125 21.5%
     Foreign -31 -36 -41 -42 37.1 141 11.4%
     Inventories -2 1 -1 1 34.6 111 30.4%
     Production -21 -33 -37 -33 43.9 137 13.9%
Total number of months: 159
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