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Economy in Brief

Italian Consumer Confidence Remains Hammered Down; Business Confidence Is Off Peak and Still Strong
by Robert Brusca  June 24, 2022

Italy's consumer confidence fell month-to-month. Consumer confidence is down 12.5% over three months and down by 14.6% over 12 months. The mean for consumer confidence in Italy is at a value of 102 so that its level of 98.3 is well below its mean. The percentile ranking of the June reading is at 28.2% which means that it has been lower than this 28.2% of the time and since the median occurs at a 50% reading, it means it is significantly below its median as well as the mean.

Month-to-month the overall situation has fallen off sharply. Evaluated over the past 12 months compared to where it stood last month, the reading is at -112 compared to -78 last month. However, the overall situation for the 12 months ahead improved slightly with a -15 reading where the May reading is -17. The mean reading for this category is at -2 making its -15 reading (although better than it was in March 2022) quite weak and well below its mean. Unemployment expectations have fallen back to reading of 5 in June from 6 in May and from 13 in March. Household budget considerations have eroded to a mark of 16 in June down from 19 in May and that compares to 18 in March.

The household financial situation over the last 12 months is now assessed as worse than it was back in May; the June -42 assessment is below the -36 in May and also below the -32 for back in March. The next 12-month outlook has -26 assessment in June, worse than May's -24 although not as bad as the March reading of -34.

The environment for savings has improved a bit month-to-month with a reading of 66 in June compared to 64 in May. Future savings are unchanged at -12 compared to -12 last month and compared well to a -10 reading it back in March.

The business index rose to 110 in June from 109.4 in May; it's only slightly below its March 2022 value which was 110.2. Over three months the business index is lower by 0.2%; over 12 months it's lower by 2.9%.

That percentile standing for the overall situation is at 19% in the lowest 1/5 of its range for the assessment of the overall situation in the last 12 months; for the next 12 months the overall situation is assessed at a 23.9 percentile standing- better but not by much. Unemployment is at a very high 70.8 percentile standing. Clearly there are concerns of higher unemployment. The household budget has a 64.6 percentile standing, more or less a midstream position. The financial situation over the last 12 months has a 35.4% outstanding, a week result but much stronger than the assessment for the next 12 months which is at 5.6 percentile. Household savings currently are considered easy to have at a 92.8 percentile standing and only slightly harder to come by in the future at an 85.2% standing. The environment to make major purchases is at a weak 29.8% standing, in the lower 1/3 of its range. Quite apart from consumer responses, the business index has an 82.3 percentile standing; businesses are not feeling or fearing anywhere near the pressure or concerns about the current environment compared to consumers- that's quite a split.

Italy is a member of the EMU; it clearly has the same kinds of problems and concerns of any other country in that area where the inflation rates have been high and where the ECB is planning to raise rates. There are concerns about rate hikes and what they're going to have to do, how high they're going to have to go, and about impact that will have on the economy. The United States has active discussions about whether the Fed is going to be causing a recession or not. Meanwhile, the war in Ukraine burns on… Russia and Ukraine continue to fight and there is no sign of progress in that war or evidence of what the end game will be. Meanwhile that war taking its toll on domestic politics in various countries. The longer the war goes on, the more it degrades Russia (and destroys Ukraine) and the more expensive it gets for the West. Eventually something will have to give. At this point, it's not clear what that will be. In the meantime -and not unexpectedly - China is probing and getting more aggressive in the Pacific around Taiwan. Hope may spring eternal but so does risk.

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