Italian Confidence Still Hitting The Skids-Hard

The Italian index of consumer confidence from ISAE fell hard this month and shows a continuing unraveling in confidence.

Yet the overall situation for the last 12-months, at first glance, does not seem too bad. Even at a raw score of minus 40 it stands in the 85th percentile of its range and in the 68th position in its rank of historic observations. In other words the past situation has been stronger than this only 38% of the time; its peak reading is only about 15% higher.

But if we explore other metrics in the table we find the real problem quickly. The problem is with expectations. Over the next 12-months the overall situation is ranked in the bottom 10% of all observations; its raw standing, a value of -27, is in the bottom 13% of its range. Consumer's assessments of the future compared to the past have turned abruptly.

The unemployment assessment for the coming twelve months is only worse than its current standing five percent of the time. In the coming twelve months, Italian households assess their own budgets as only worse than their current position 15% of the time. These are highly distressed readings.

Household's financial situations, assessed at a moderate 68th percentile over the past 12-months, are down to a bottom ten percentile assessment over the coming twelve months. Household savings, a top 12% occurrence in historic comparison over the past twelve months, have plunged to a bottom 8% assessment over the coming twelve months.

It is not surprising therefore that the consumer confidence overall measure stands in the bottom 14% of its range and is in the bottom 6 percentile of its ranked queue of historic results (worse than its current level only 6% of the time...). That means, of course, that consumers on balance feel worse than this about 6% of the time. And it you look at the frequency of recession we are talking about comparisons with recession periods for the most part. In addition the 3.4 point drop in the monthly index puts it in the bottom 11% of measures of month-to-month changes. Italy is suffering not just a very weak reading but one that is deteriorating rapidly. This is a matter for concern in the Euro-Area's third largest economy.