Stronger manufacturing sector in Italy underpins rise in business confidence
Staff Writer |
Business confidence amongst private sector companies in Italy has strengthened, with activity, new business, and profitability all forecast to increase over the coming 12 months.
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Manufacturers are particularly upbeat, in part due to rising foreign demand and a boost to investment from the Industry Plan 4.0 programme.
Plans for capital expenditure and employment in manufacturing are both at their highest levels in the survey history.
The net balance of companies expecting to record an increase in activity over the coming 12 months was +40%, up from +38% and broadly in line with the average for the Eurozone (+41%).
Both sectors recorded an improvement in confidence regarding activity.
The manufacturing net balance improved to +41% (from 37%), whilst for services the net balance was at +40%, up from +38%.
Growth in activity is closely linked to expected gains in new business, which in turn will bolster revenues and profitability.
Companies have been encouraged by recent gains in new contracts, with the burgeoning post-crisis economic recovery in Italy reported to be supporting growth – and subsequently sentiment.
Firms operating in the manufacturing sector are particularly confident of a rise in demand from abroad and, as such, are more confident than their service sector counterparts.
Optimism surrounding profitability in manufacturing is at the highest level seen since June 2014.
In contrast, there are concerns that local/geo-political uncertainty, low cost-competition from abroad and social instability (e.g.
Brexit) are threats to growth and, as such, are weighing on confidence.
With growth in new work, activity and profitability broadly forecast, companies in Italy are also predicting an increase in employment over the coming 12 months.
However, there is some contrast between sectors.
Whilst service providers are expecting a slightly slower rate of growth than the previous survey’s record level, the expected gain in manufacturing was the best seen since data were first collected in October 2009.
Meanwhile, encouraged by the government’s Industry Plan 4.0, planned capital expenditure amongst manufacturers is the strongest recorded in the survey history (net balance: +27%).
Conversely, worries over credit lines and rising costs placed some restriction on service providers’ capex plans. ■