The ISAE business index is still in a weakening trend. However, it currently only hovers near the midpoint of a range it has occupied over the last eight years.

But looking at the table below we see that the domestic economy is generally in WORSE shape for overall industry as well as each industry segment compared to the foreign sector. Overall the domestic economy order/demand situation is in the 36th percentile of its range. The foreign sector is in the 50th percentile of its range. These comparisons play out like that across industry segments as well.

One interesting conclusion that this suggests is that it is not the strong euro that is crushing Italian industry. Since its greatest weakness comes from the domestic economy, Italy’s biggest problems seem to be home-grown. One problem may be that jobs are just not paying what they should and growth in jobs is not what it should be to support business at home. Certainly Italian consumer confidence is very weak. And through that channel the international economy is being felt, but in a more structural way, not in a cyclical currency way. Since Italian firms seem to be doing better abroad than at home the euro per se does not appear to be the proximate cause of its weakness. Internationalization and competition in general may be root problems. Competitiveness may be an issue but if it is, it is an issue in a structural sense. And that will be a tougher problem to solve than a too-strong euro.

Italy, like France and Germany, shows that one of the weakest portions of the economy continues to be the consumer sector. There, the domestic order situation is in the bottom 22nd percentile of its range compared with a nearly as weak 23rd percentile for overseas orders. Production is in its 22nd percentile. The sector is the weakest overall among Italian industries.>

The theme of a weak consumer/consumer-serving sector is one of the most durable across the Euro Area.