Italians are even more pessimistic and in July the two Istat indices that measure the climate of consumer and business confidence worsened towards the black mood. The benchmark number of consumer optimism in July dropped from 98.3 to 94.8; it is the minimum since May 2020 when the Italians were still wrapped in the grip of viral confinement. The business confidence index fell from 113.4 to 110.8.
All components of the consumer optimism index are decreasing: the economic climate and the climate for the future fall – in order – from 93.9 to 84.9 and from 98.8 to 92.9. For businesses, confidence is worsening in manufacturing (the index falls from 109.5 to 106.7) and in market services (from 109.0 to 104.1) while there is a breath of optimism in construction (the index rises from 159.7 to 164.4) and in retail trade (from 107.2 to 108.1).
Orders, production, inventory and other items
In manufacturing, expectations on the level of production worsened and, to a more marked extent, opinions on orders. Stocks are judged to be down on last month.
In the construction sector, assessments on orders improved but above all expectations on employment in the company grew.
With reference to market services, all the variables that make up the indicator deteriorate compared to last month.
Finally, in the retail sector, the negative dynamics of judgments on sales are associated with a marked increase in expectations on future sales and an increase in inventories.
The comment from Istat
«In July – comments Istat – the business confidence index decreases, returning to the level of last May. The worsening is determined by the negative evolution of confidence in manufacturing and market services. The consumer confidence index also shows a negative trend, reaching a minimum since May 2020. There is a widespread worsening of all the variables involved in the calculation of the index, with the exception of the judgments on the opportunity to purchase durable goods in the current”.
Nomisma’s observations
“Consumers are intensely feeling the decline in purchasing power as a result of rising inflation and immovable wages. Companies feel the pressure of the increase in energy prices, raw materials and logistics, as well as feeling echoes of recession resulting from the international situation and the restrictive European monetary policy ”, warns Lucio Poma, chief economist of Nomisma. However, “if the complex international situation and the consequent pressure on energy prices and raw materials is undeniable, the Italian economy as a whole is not in dire straits”.
Consumer associations are on the alert
According to Federconsumatori, “families are already giving up meat and fish, whose consumption has dropped by more than 16%, they are choosing cheaper vegetables and vegetables, often resorting to last minute offers and stalls with products closest to expiry. In terms of holidays, families who can allow themselves the luxury of leaving opt for low cost solutions (looking for hospitality with friends and relatives or booking out of season) or reduce the length of their stay. In addition, personal care costs and even health costs are decreasing: non-urgent specialist visits and dental care are being cut, but above all, prevention is being cut ».
Massimiliano Dona, president of the National Consumers Union says: “It is not just the Ukraine effect, expensive bills and expensive fuel, which certainly for months has plunged the confidence of Italians, now at their lowest since May 2020”.