Business confidence in Italy sinks to lowest in two years
Staff Writer |
Business confidence amongst Italian private sector companies deteriorated during June, with optimism regarding future activity, new business and profits all declining to two-year lows.
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Overall, the net balance of companies forecasting an increase in activity in the coming 12 months slipped to +36%, from +41% in the previous survey period.
The downturn was led by manufacturers, where optimism for activity sank to the lowest since October 2012.
At +27%, the net balance for activity was down by 17 percentage points, the biggest fall recorded since the height of the Eurozone debt crisis in 2011.
Political instability, rising costs and the increasing global trend to trade protectionism were all reported by manufacturers as reasons for lower sentiment.
Service sector companies were a little more sanguine about such issues and as such the respective net balance for activity was little changed at 39%.
Expectations of a general improvement in internal demand, reduced fiscal constraints and the rewards of investment were all reported as reasons to be confident.
Similar trends to activity were recorded for business revenues and profits during June.
At the aggregate level, forecasts for both variables hit their lowest levels since mid-2016.
Sentiment amongst manufacturers regarding business revenues was the lowest recorded by the survey since early 2013, whilst profits are expected to grow at the slowest rate since the start of 2016.
Service sector providers were more upbeat than their manufacturing counterparts when discussing revenue and profits forecasts.
However, in each instance, sentiment was the lowest recorded by the survey since 2016.
In spite of the noticeable weaker trends in activity, new work, revenues and profitability, companies retained fairly elevated expectations for employment in June.
Although down on the previous quarter’s +20%, at +17% the net balance for employment was amongst the highest in the survey’s history (which started in late 2009).
Broadly similar levels of optimism for staffing levels were recorded amongst service providers and manufacturers, although confidence amongst the latter was the lowest since June 2016.