Economy in Brief

The chart shows that within the big picture Italian confidence both business and consumer confidence has been relatively steady in recent months for about a year. The consumer reading has had some volatility but no trend. Technically in the current month business confidence is unchanged, and consumer confidence has moved up a couple of tenths of a point on the index of consumer confidence. The index is higher by 0.7% over three months and lower by 1.5% over 12 months. When ranked on data back to late-1997, the current index ranks in a 68.7 percentile of its queue of data, placing it in the top one-third of confidence values over that period. It’s a reasonably firm reading and a high reading by most standards among European countries at this time.

Assessments of the overall situation over the last 12 months improved to net survey reading of -62 in September from -67 in August. That reading has a 63.6 percentile standing.

Assessing the overall situation for the next 12 months ahead, there's another improvement to -20 in September from -24 in August; however, this is a much weaker reading, residing in a 10.7 percentile of its historic queue of data. So, while the overall situation has been relatively firm and the overall confidence reading is firm, the outlook for the next 12 months has some ominous undercurrents to it. Unemployment expectations have increased slightly to a -3 reading from -4. That index in September has a 27.5 percentile standing, a relatively low standing overall but still a little high to be really comfortable from a consumer confidence standpoint. Household budget assessments improved slightly to +24 from +23, which has a very strong standing in its 88th percentile.

The household financial situation, looking ahead, improves slightly; over the last 12 months it deteriorated slightly. The backward-looking measure has a 67.8 percentile standard while the forward-looking measure has a 12.2 percentile standard, once again, raising those concerns about what the future is going to hold.

The current assessment for household savings slipped slightly to a reading of 49 in September from 52 in August; the future reading is steady at -6 in September. The current reading has a 34.9 percentile standing; the future reading has the 97-percentile standing. This higher reading for the future is not necessarily good news as responses to savings are typically correlated negatively with responses about intentions to spend and are often associated with concerns about the future. However, the direct question about the environment for making major purchases showed a slight improvement to -29 in September from -30 in August and produced a standing in a 66.9 percentile, a top one third reading. For now, the consumer in Italy is still undaunted and holds relatively firm view of the environment for spending. The business environment assessment was unchanged month-to-month but overall has a much weaker standing.

The businesses assessment is only in the 24.5 percentile of its historic queue of data marking the responses as a bottom 25 percentile response which is not reassuring.

The Confederation of British Industry report shows some improvement and deterioration in the same month; retailing improves while wholesale survey worsens sharply. The look-ahead to October for retailing weakens sharply while there was mixed performance in the outlook for wholesaling. The report doesn't do much to clarify the outlook.

Current Sales: Current sales compared to a year ago improved to -29 in September from -32 in August. Orders compared to a year ago also improved to -36 from -40. These improvements still leave the monthly reading levels worse than their respective 12-month averages although sales at the time of year are significantly better than their 12-month average. The queue percentile standings for these metrics of sales are all weak, the only element in the report that is strong, or firm is for the stock to sales comparison, and that is usually a negative indicator.

Sales Expectations: The expectations in October for sales dropped sharply to a -36 reading from -16 in September, orders dropped to -38 from -32 in September while sales ‘for the time of year’ plunged to -43 from -20. Each one of these readings is weaker than its 12-month average. Historic standings are even weaker than for the current sales and orders metrics, with sales for a year ago with a 4.9 percentile standing and sales ‘for the time of year’ at an even weaker 1.4 percentile standing, rarely ever weaker. The current vs. the outlook signals are crossed.

Current Wholesaling: Worse performance in the current readings while the outlook for the next month is mixed marks the overview of the wholesale trade arm of the distributive sales report. Sales adjusted for the time of year and orders and sales compared to a year ago all deteriorate. Each one of these readings is not only weak month-to-month but each is weaker than its respective 12-month average. And the queue rankings are all in the lower tenth percentile range.

Wholesaling Expectations: The outlook shows mixed performance for sales compared to a year ago, improving to -22 in October from -26 in September; orders deteriorated to -41 from -38 in September. Sales ‘for the time of year’ barely ticked weaker in October. Readings are weaker than their respective 12-month averages as well, except for year-ago sales. The percentile standings for the three categories range from a ‘high’ percentile standing at its 14th percentile for sales compared to a year ago, while the other two metrics show rankings that are below their 5th percentiles in their historic queue of values – an extremely weak showing.

Summing up: Clearly the survey shows a mixed view of retail and a general worsening as well as a mixed-up picture between current performance vs. what is expected for next month. While there is little consistency in this survey in terms of monthly changes, what is crystal clear is that conditions - no matter where, or when, assessed - are very weak. Perhaps it is reports like this one that are keeping the Bank of England on hold instead of battling inflation with growth looking like it might give way at any moment.