Italy business and consumer morale improves in January

Morale among Italian businesses and consumers improved unexpectedly in January, data showed on Wednesday, brightening prospects for the eurozone’s third largest economy which has stalled in recent months.

National statistics institute ISTAT’s composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, came in at 95.7, compared with 95.3 in December.

The sub-index measuring morale among manufacturers climbed to 86.8 from 85.9, above a median forecast of 85.5 in a Reuters survey of analysts.

This increase, coupled with a marked improvement in sentiment in the construction sector, outweighed modest declines in the retail and services sectors.

Consumer confidence rose this month to 98.2 from 96.3 in December, ISTAT said, easily beating a median forecast of 96.0 in Reuters’ poll and posting the strongest reading since September.

Italian gross domestic product stagnated in the third quarter of last year from the previous three months, and ISTAT has said it expects no substantial pick up when it issues a preliminary estimate for Q4 GDP on Thursday.

The statistics bureau forecast last month that full-year 2024 growth will come in at around 0.5 per cent, half the government’s official 1.0 per cent target.

Most analysts and forecasting institutes also expect this year’s GDP expansion to be significantly below Rome’s official forecast of 1.2 per cent.

Meanwhile Italy’s unemployment rate dipped to 5.7 per cent in November, the lowest reading since the current series began in 2004, but 13,000 jobs were lost during the month, national statistics bureau ISTAT reported on Tuesday.

The jobless rate in October was 5.8 per cent and a Reuters survey of 11 analysts had forecast a November reading of 5.9 per cent.

In the September-to-November period, employment was up by 49,000 or 0.2 per cent, compared with the previous three months, ISTAT said.

In November, the number of people in work was up by 328,000, or 1.4 per cent, compared with November 2023. In the same month, the number of so-called “inactive” people, who are neither in work nor looking for work, rose by 23,000, or 0.2%, from October, and by 323,000 (2.6 per cent) on a yearly basis.

The youth unemployment rate, measuring job-seekers between 15 and 24 years old, rose to 19.2% in November from a revised 17.8 per cent the month before.

Italy’s overall employment rate, one of the lowest in the eurozone, was stable in November at 62.4 per cent.

Italy’s 10-year yield was up 2 bps​ at 3.597 per cent, after touching 3.629 per cent, its highest since Nov. 18. The gap between Italian and German yields widened 1.5 bps to 112.7 bps.

Germany’s two-year bond yield, which is more sensitive to changes in ECB rate expectations, was little changed at 2.197 per cent.

Meanwhile the Italian industrial output was flat in October from the month before, a weaker than expected reading, following a revised 0.3 per cent decline in September, data showed on Tuesday, as the country’s manufacturing sector continues to struggle.

A Reuters survey of 18 analysts had pointed to a 0.2 per cent month-on-month increase in October.

September’s data was revised up marginally from an originally reported fall of 0.4 per cent.

On a work-day adjusted year-on-year basis, industrial output in the euro zone’s third largest economy was down 3.6 per cent, the 21st consecutive annual decline, after a 3.9 per cent drop in September, national statistics bureau ISTAT said. In the three months to October output was down 0.7 per cent compared with the May-July period.

In October, month-on-month rises in output of consumer goods and energy products were offset by declines in investment goods and intermediate goods.

The Italian economy stagnated in the third quarter from the previous three months due to a slump in exports and investments, ISTAT reported last week, and recent indicators have been largely weak.

Meanwhile the eurozone bond yields nudged lower in early trade, moving in line with US debt, as traders caught their breath ahead of the Federal Reserve’s meeting later in the day and European Central Bank’s on Thursday.

Germany’s 10 year yield, the benchmark for the Eurozone, was last down 2 basis points at 2.54 per cent, broadly in the middle of its recent range.

The day’s main scheduled macro economic event is the Federal Reserve interest rate decision.

While the decision itself will likely be unremarkable - the Fed is expected to hold rates steady - investors will be watching chair Jerome Powell’s press conference for any sense of how he is processing both Donald Trump’s early economic policies and this week’s tech-led equities selloff.

Agencies

Morale among Italian businesses and consumers improved unexpectedly in January, data showed on Wednesday, brightening prospects for the eurozone’s third largest economy which has stalled in recent months.

National statistics institute ISTAT’s composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, came in at 95.7, compared with 95.3 in December.

The sub-index measuring morale among manufacturers climbed to 86.8 from 85.9, above a median forecast of 85.5 in a Reuters survey of analysts.

This increase, coupled with a marked improvement in sentiment in the construction sector, outweighed modest declines in the retail and services sectors.

Consumer confidence rose this month to 98.2 from 96.3 in December, ISTAT said, easily beating a median forecast of 96.0 in Reuters’ poll and posting the strongest reading since September.

Italian gross domestic product stagnated in the third quarter of last year from the previous three months, and ISTAT has said it expects no substantial pick up when it issues a preliminary estimate for Q4 GDP on Thursday.

The statistics bureau forecast last month that full-year 2024 growth will come in at around 0.5 per cent, half the government’s official 1.0 per cent target.

Most analysts and forecasting institutes also expect this year’s GDP expansion to be significantly below Rome’s official forecast of 1.2 per cent.

Meanwhile Italy’s unemployment rate dipped to 5.7 per cent in November, the lowest reading since the current series began in 2004, but 13,000 jobs were lost during the month, national statistics bureau ISTAT reported on Tuesday.

The jobless rate in October was 5.8 per cent and a Reuters survey of 11 analysts had forecast a November reading of 5.9 per cent.

In the September-to-November period, employment was up by 49,000 or 0.2 per cent, compared with the previous three months, ISTAT said.

In November, the number of people in work was up by 328,000, or 1.4 per cent, compared with November 2023. In the same month, the number of so-called “inactive” people, who are neither in work nor looking for work, rose by 23,000, or 0.2%, from October, and by 323,000 (2.6 per cent) on a yearly basis.

The youth unemployment rate, measuring job-seekers between 15 and 24 years old, rose to 19.2% in November from a revised 17.8 per cent the month before.

Italy’s overall employment rate, one of the lowest in the eurozone, was stable in November at 62.4 per cent.

Italy’s 10-year yield was up 2 bps​ at 3.597 per cent, after touching 3.629 per cent, its highest since Nov. 18. The gap between Italian and German yields widened 1.5 bps to 112.7 bps.

Germany’s two-year bond yield, which is more sensitive to changes in ECB rate expectations, was little changed at 2.197 per cent.

Meanwhile the Italian industrial output was flat in October from the month before, a weaker than expected reading, following a revised 0.3 per cent decline in September, data showed on Tuesday, as the country’s manufacturing sector continues to struggle.

A Reuters survey of 18 analysts had pointed to a 0.2 per cent month-on-month increase in October.

September’s data was revised up marginally from an originally reported fall of 0.4 per cent.

On a work-day adjusted year-on-year basis, industrial output in the euro zone’s third largest economy was down 3.6 per cent, the 21st consecutive annual decline, after a 3.9 per cent drop in September, national statistics bureau ISTAT said. In the three months to October output was down 0.7 per cent compared with the May-July period.

In October, month-on-month rises in output of consumer goods and energy products were offset by declines in investment goods and intermediate goods.

The Italian economy stagnated in the third quarter from the previous three months due to a slump in exports and investments, ISTAT reported last week, and recent indicators have been largely weak.

Meanwhile the eurozone bond yields nudged lower in early trade, moving in line with US debt, as traders caught their breath ahead of the Federal Reserve’s meeting later in the day and European Central Bank’s on Thursday.

Germany’s 10 year yield, the benchmark for the Eurozone, was last down 2 basis points at 2.54 per cent, broadly in the middle of its recent range.

The day’s main scheduled macro economic event is the Federal Reserve interest rate decision.

While the decision itself will likely be unremarkable - the Fed is expected to hold rates steady - investors will be watching chair Jerome Powell’s press conference for any sense of how he is processing both Donald Trump’s early economic policies and this week’s tech-led equities selloff.

Agencies