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Economy in Brief

Italian Business Confidence Despite Bounce in October Remains Quite Weak
by Robert Brusca  October 28, 2014

Italy's business confidence rose unexpectedly in October. The Index advanced to 96.0 from September's 95.5 and was last higher in July 2014. The index of business confidence stands in the 32nd percentile of its historic rank, meaning that the index has been lower less than one third of the time. Despite the rebound in October, Italian business confidence remains very low. While the headline shows that the index advanced, the real story is that business confidence in Italy clings to extremely low levels.

Order books in Italy improved to -25 in October from -26 in September. This deeply negative reading stands in the 38.9 percentile of its historic queue, telling us that orders are weaker, less than 40% of the time. Foreign orders registered a reading of -21, the same level as in September. Despite the weak reading, foreign orders stand in the middle of the pack in terms of historic performance. Foreign orders are weaker than this level about 54% of the time. This also tells us that the foreign order reading is above its median because the median on this statistic occurs at the 50% standing.

The inventory reading has been steady at 3 over the last three months and it stands in the 42nd percentile of its historic queue, still below the midpoint of its historic range.

The chart shows us that year-over-year change in confidence has been rising for about the past year but that the change has recently turned to slight declines. Italian confidence dropped sharply three months ago. Despite this month's rise, confidence continues at levels that are substantially weaker than those prior to three months ago. Up to July Italian confidence readings had stood in the 98-99 index level for nine consecutive months. In August the index slipped down to the readings of 95, now 96. Despite the slight rebound in October, it is still in the lower range. We see business confidence in Italy has moved into a lower plateau from August to October. This month's rise has not changed that.

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