Italy: Confidence data consistent with recession in 1Q19 - ING

According to Paolo Pizzoli, senior economist at ING, Italy’s February confidence data has pointed towards a continuation of the economic recession as consumer confidence fell to 112.4 (from 113.9), an 18-month low, and the composite business confidence was down to 98.3 (from 99.1 in January), the lowest level since March 2015.

Key Quotes

“The sector split shows that confidence fell slightly in manufacturing and services, and much more heavily in construction, while it rebounded substantially among retailers. A quick look at the forward-looking part of the report in the manufacturing domain shows that order books remain under pressure, more markedly in the intermediate and the investment goods sectors, and that judgments on inventories are picking up.”

“All in all, today’s release points to a continuation of the soft patch for the Italian economy, supporting our view that 1Q19 will see another quarterly contraction for Italian GDP (we anticipate a -0.1% quarter-on-quarter). The recession theme will likely become more central in the domestic political debate, which is currently concentrating on the impact of recent local elections.”