Business confidence in Italy deteriorates to five-year low
Staff Writer |
Business confidence amongst Italian private sector companies has deteriorated in October to a five-year low, with output, new business and profitability all forecast to increase at weaker rates over the coming 12 months.
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A net balance of +28% of Italian companies predict a rise in business activity over the next 12 months, down from +36% in the previous survey period and the lowest since June 2013.
Despite this, Italian business activity expectations are broadly in line with the eurozone average and other key European economies of Germany and France.
Manufacturers and service providers have similar output expectations with the latter showing a marked deterioration in their outlook since June.
Softer growth of new orders and business revenues are likely over the coming year, with firms downgrading their outlook for profitability accordingly.
A net balance of +20% of firms predict an increase in profits, the lowest since February 2016.
Expectations of greater customer numbers and decreases in taxation were cited by Italian private sector businesses as reasons to be optimistic for output over the year ahead.
Conversely, uncertainty about domestic political stability and weakening demand both at home and abroad are set to weigh on growth in the coming 12 months.
The reduction in confidence regarding output during the October survey period is linked to softer sentiment on business revenues.
Companies are set to be negatively affected by rising input costs, fears of an economic downturn in Italy and uncertainty over global trade flows.
Forecasts of business revenues have hit their lowest levels since June 2013.
With weaker growth forecasts for activity, new work and business revenues, planned investment expenditure among private sector businesses in Italy has eased during the October survey period.
On the sector level, there are differing trends between the manufacturing and service sectors, with the latter seeing confidence regarding capital expenditure at a two-year high.
Manufacturers, on the other hand, slowed their capital investment expectations to the lowest in five years.
On the employment front, hiring optimism among Italian private sector businesses has weakened to a two-year low with fewer manufacturers and service providers planning to increase staffing numbers over the next year. ■