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Italy business and consumer confidence morale fall in Aug -ISTAT

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Morale amongst Italian businesses and consumers fell in August, data showed on Friday, with households registering a sharp drop in expectations about the general economic outlook.

National statistics institute ISTAT’s manufacturing confidence index fell to to 113.4 this month from a downwardly revised 115.2 in July, lower than a median forecast of 115.0 in a Reuters survey of five analysts. Last month’s figure was previously given as 115.7

ISTAT’s composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, fell to 114.2 from a revised 115.9, ending eight consecutive months of increases. Last month’s reading was previously given as 116.3.

The main contributors to the decline were the manufacturing and construction sectors, where all index components worsened, as well as market services, where expectations over orders fell sharply.

After four consecutive months of increases, consumer confidence this month fell to 116.2 from 116.6 in July, against a median forecast of 116.1 in the Reuters’ poll.

The fall in business and household confidence comes against a backdrop of a slight increase in COVID infections in Italy.

Almost 129,000 people have died of the coronavirus in Italy since its outbreak emerged in February last year, the second highest toll in Europe and the eighth highest in the world.

Prime Minister Mario Draghi’s government began easing restrictions on business and movement in April, in response to a decline in infection rates and progress in vaccinations. Almost all curbs have now been removed, even though infections have picked up over recent weeks.

The euro zone’s third largest economy contracted by 8.9% last year, its steepest post-war decline in gross domestic product. Rome’s official forecast is for a rebound of 4.5% this year, but the government has recently said growth of around 5% now looks likely.