Italy business morale sinks, casting shadow over growth prospects
2024.10.25 05:26
By Gavin Jones
ROME (Reuters) – Italian business and consumer confidence both dropped unexpectedly in October, data showed on Friday, with a multi-year low in sentiment among companies casting a shadow over growth prospects for the euro zone’s third-largest economy.
National statistics institute ISTAT’s composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, fell to 93.4 from September’s level of 95.6.
The October reading was the lowest for at least three years, the period for which ISTAT immediately provided data, and was probably the weakest since the economy was crippled by the COVID-19 pandemic in 2020.
A steep fall in morale among service industries and a more modest drop among manufacturers offset improved sentiment in the construction and retail sectors, ISTAT’s figures showed.
The data is a blow to Giorgia Meloni’s government, which this month presented a 2025 budget aimed at reining in the fiscal deficit while cutting taxes for low and middle-earners.
The government said this month that its growth target of 1% for this year looked hard to meet after ISTAT revised down data for the first and second quarters.
The statistics bureau will issue a preliminary estimate for third quarter gross domestic product on Oct. 30.
Most analysts expect Italy’s 2024 growth to come in at roughly the same rate as the 0.7% posted last year, and the government is also widely seen missing its 1.2% goal for 2025.
The International Monetary Fund and Italian business lobby Confindustria this week issued 2025 forecasts of 0.8% and 0.9% respectively, with both bodies implicitly indicating that the expansionary measures in Rome’s budget will not boost the economy as intended.
ISTAT’s manufacturing confidence sub-index slipped to 85.8 in October from 86.6 the month before, coming in below a median forecast of 87.0 in a Reuters survey of nine analysts.
Consumers were also more gloomy in October, with their morale index declining to 97.4 from 98.3 the month before, below the Reuters survey forecast of 98.5.
