Italy’s Biz Confidence Drops; Resides in Bottom Third of its Range

In recent months Italy’s business confidence has been chopping around its current level but this is now the lowest reading of this cycle. In May Euro-data both Italy and France scored order increases that were quite strong by the Zone’s standards. But, in this June report, it is clear that both domestic and foreign orders are under downward pressure. Total domestic orders lie in the bottom quartile of their range and total foreign orders reside in the bottom third of their range.

Sector performance does differ quite a lot. For investment goods the picture is quite different. Investment goods’ foreign orders are actually above their 10 year average and reside in the top 40% of their range Domestic orders for investment goods still stand in the bottom 40% of their range. So the investment goods sector is still performing quite adequately, led by exports. May and June are a marked improvement over April’s low point for foreign orders. But domestic investment good orders continue to be depressed. For consumer goods the picture is bleak for both domestic and foreign orders. Both series remain depressed. Domestic orders are in the bottom 16 percentile of their range and foreign orders are in the bottom 21 percentile of their range.

Production characteristics are…Production overall is in the bottom third of its range with investment goods in the bottom 45^th percentile of their range and consumer goods in the bottom quarter of their range. Italy’s investment goods sector is doing best overall held by strength overseas. All signs point to a weak domestic economy, however. Consumer goods are weak and the intermediate sector is as you would expect in the middle of these trends. But only the investment goods sector is performing above par but with its production trend slipping and inventories high by historic standards. Italy is a troubled economy.