Italy: business and consumer confidence rebound strongly in November | Picture | So Good News

November’s confidence index shows a sharp improvement among consumers and businesses, reversing the decline that began in July. We are very cautious in interpreting November’s reading as a sign of change, but it does indicate that the slowdown in inflation may be – for now – soft.

Consumer confidence gained eight points in November, back from August. Interestingly, the biggest driver of the rebound was the next season’s big change. Consumers seem to be hoping for an economic recovery in Italy, with a positive impact on future unemployment. Looking at the current environment, with inflation still increasing and overcoming the power of wages, it is not easy to justify such a change. A possible explanation may be relief after the elections, as Meloni’s new government has announced that it will continue to help families pay for the negative effects of power shocks on their financial losses.

In the business sector, the rate of recovery in confidence has widened, with the exception of construction, where confidence continued its decline from previous highs. As with consumers, there seems to be a clear gap between the current state of the business and the expectations of it. Taking the manufacturers as an example, they see that the regulations are deteriorating and highlighting the amount of finished goods, clearly showing the soft demand there, but at the same time showing the increase in the strength of the expected products.

When looking for a job, the most common is a job in tourism management. After a sharp decline in September and October, confidence in the tourism sector has increased significantly, until August. Interestingly, this change is driven by current and prospective plans, both of which achieve similar benefits. On the back of the previous reliable data we were expecting the end of tourism in the fourth quarter; The November numbers seem to indicate that inertia in the sector is strong and that expected growth may be modest.

All in all, although we have strong confidence today, we don’t believe that economic change is happening, at this point. The negative effects of inflation are still there for consumers and businesses and we suspect that the refinancing measures will not be enough to prevent the decline in GDP in the fourth quarter of this year. But this could be a little slower, which increases the risks to our expectations of 3.6% GDP growth in 2022.