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Economy in Brief

Italy's Economy Still Hitting Bumps And Potholes
by Robert Brusca  March 29, 2011

Italy's Business sentiment index is up in March rising to 103.8 from 103.1 in February. The index sits in the 71st percentile of its range and at the 62nd percentile of its ranked queue. While it is reaching a post-recession high its pace of increase has been tapering off since early 2010.

The overall index had topped out at 112.3 in March of 2007 ahead of the recession. It remains well below its past cycle peak. Total and foreign demand stand in the 60th and 61st percentiles of their respective ranges or below the 45th percentile by ranking percentiles. In short Italy's gauges are showing that there is improvement afoot but still there is a long way to go.

The production metric at a raw net reading of -14 stands in the 57th percentile of tis range and at the 35th percentile of its ranked queue; in other words the production index is higher than this about 65% of the time.

Italy's economy is more significantly linked to Libya than any other in the Zone. Libyan oil has been important to Italy. Italy's PM had cultivated a personal relationship with Libyan strong man Gaddafi. Now that closeness and economic integration will probably hinder Italy's attempt to keep its economy strong. On top of that PM Berlusconi is fighting for his own political life. On balance there is not much to recommend being upbeat on Italy's prospects. It will probably continue to recover along with the rest of Europe will also probably be a laggard instead of a leader.

Italy ISAE Business Sentiment
  Mar-11 Feb-11 Jan-11 Dec-10 Percentile Mean Rank%
Biz Confidence 103.8 103.1 103.5 103 71.6 101 62.7%
TOTAL INDUSTRY
Order Books & Demand
  Total -18 -18 -19 -18 60.3 -16 41.1%
   Foreign -19 -12 -17 -19 61.5 -18 44.9%
Inventories 0 0 -1 -1 45.8 3 29.1%
Production -14 -15 -15 -17 57.1 -12 35.4%
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