Biz Confidence Sinks Further in Italy

Italy’s Business confidence gauge from ISAE edged lower in March to 89 from 89.6 in February. The pace of its decline, however, seems to have slowed (see the blue line in accompanying chart). Overall confidence is not in terrible shape as it stands in the 72^nd percentile of its range of values going back to 1991. But it has weakened and is weaker than it was.

Still, Italy shows the same malaise as most other European countries. It is the consumer sector that is weakest. The industry order gauge for consumer goods stands in the 15^th percentile of its range, the weakest of all sectors. Intermediate goods orders are in the 43rd percentile of their range and capital goods orders are in the 57^th percentile of their range. For all of industrial the sector order gauge stands in the 31^st percentile of its range.

For most sectors domestic and foreign orders are about the same in percentile terms. But for consumer goods, foreign orders are in the 31^st percentile of their range compared to a 13 percentile standing for domestic orders. The consumer goods production gauge is also the weakest among sectors standing in the 19^th percentile compared to 51^st percentile for capital goods and a 31^st percentile reading for intermediate goods.

In Italy capital goods are holding up while the consumer sector is under pressure led by weakness at home. While Italy’s business gauge has continued to drop the good news is that the pace of that drop has slowed.