Consumer and Business Confidence Decline in Italy in August 2023

In August 2023, there has been a slight decrease in consumer confidence in Italy, with the confidence index dropping from 106.7 to 106.5. However, a more pronounced decline is observed in the composite index of business confidence, which falls from 108.9 to 106.8.

Among the components of the consumer confidence index, there are mixed signals summarized by changes in four indicators calculated monthly from the same components. The economic climate and future prospects both decrease, from 123.4 to 121.5 and from 115.0 to 114.1, respectively. On the other hand, personal climate and current situation indicators increase, going from 101.1 to 101.5 and from 101.0 to 101.4, respectively.

Regarding businesses, a reduction in the confidence index is estimated for all sectors examined. Specifically, in the manufacturing industry, the confidence index drops with varying intensities between manufacturing and construction. The index goes from 99.1 to 97.8 in manufacturing and from 166.5 to 160.2 in construction. Deterioration in confidence is also observed in the services sector, with the index in retail trade declining from 111.0 to 108.8 and in market services from 105.5 to 103.6.

Analyzing the components of the confidence indices, both judgments on orders and expectations regarding production levels worsen in manufacturing. Stock levels remain relatively stable. In the construction sector, negative dynamics are noted in judgments on orders/construction plans and expectations about employment within companies.

In the context of market services, positive judgments on orders are coupled with deteriorating expectations for orders and opinions on business performance. In retail trade, all components show a decline.

Commentary: In August, the decrease in the business confidence index reflects a widespread deterioration across all economic sectors under examination. The index reaches its lowest value since November 2022.

The consumer confidence index experiences a slight reduction, though it remains above the average level for the January-July 2023 period. Notably, there is a significant worsening of opinions on the overall economic situation, a decrease in unemployment expectations, and an improvement in assessments of personal economic conditions.