Italian Confidence Ekes Out Small Gains

Italian consumer confidence moved up to 105.1 in March from 104 in February; this gain continues a 2-month string of increases for the confidence measure. Confidence has now climbed above its median for the period since late-1997 and has a 58 percentile standing in that queue of data on that timeline.

The overall situation for the last 12 months has improved to a -90 in March from a -96 reading in February. It shows a rise of 19 points over three months compared with decline of 23 points over 12 months and has a 44.3 percentile standing, below its median for this period.

Looking ahead over the next 12 months, the overall situation is slightly firmer, up by plus one compared to a -1 reading in February. Unemployment, at -8 is less feared than it was in February at a -6 reading; the household budget has a +15-reading compared to +11 in February. Each of these readings reflects a month-to-month improvement. Each reading has improved for two months in a row. The assessment of the overall situation for the next 12 months has a 59-percentile standing. Concerns about unemployment have only a 17-percentile standing, indicating relative security on the part of the labor force. The household budget has a 62.6 percentile standing, above its historic median and a relatively firm reading as of March.

The household financial situation over the last 12 months has improved to -39 from -47 in February and it has a 46.6 percentile standing, below its historic median. The outlook for the next 12 months improves slightly to -14 from -15 in February and continues to show a weak reading with a 17.4 percentile standing. The outlook for the household sector financial situation is still quite poor.

Current household savings backtrack slightly in March and that series has backtracked for a number of months in a row but still has a 62-percentile standing. Household savings for the future backtracked in March compared to February, but February had improved sharply compared to January. That series has a 97.7 percentile standing, an extremely strong mark, indicating confidence in being able to save in the future.

The environment for making major purchases in March improved slightly to -42 from -45 in February; that in turn had improved from a -51 in January. That series has improved over three months by one point on a net basis although it's weaker by 9 points over 12 months and has a percentile standing in March of 35.1%, significantly below its median and close to the bottom 1/3 of its range of values experienced since late 1997.

Italy's business index improved to 104.2 in March from 103 in February and it's riding a string of small increases. Over three months the index has increased by 2.5%, but over 12 months it's declined by 6.1%. An improvement in the business index is a relatively nascent event. The percentile standing of the March reading is in its 56.9 percentile; that places it slightly above its historic median leaving it and what I would call tepid territory.

The Italian business and consumer confidence metrics for the most part show some firming in recent months. However, very few elements of this survey are strong and many of the components continue to display considerable consistent weakness. Of course, it's not surprising given that inflation remains high that the ECB is still raising interest rates and that there is a war in Ukraine that has created some political divisions within Italy. The banking crisis will be a new feature we'll have to see how the Italian economy holds up since in the past there have been some issues among Italian banks. For March, the report is relatively constructive, but guarded.