According to Bankitalia the Italian companies remain pessimistic on the progress ofinflationat least for another year. The certify the investigation conducted from via Nazionale between 22 November and 14 December 2022 at Italian industrial and service companies with at least 50 employees. However, "judgments on the general economic situation and on its operating conditions in the fourth quarter of 2022 are less negative than in the previous period", explains the survey which underlines: "expectations on demand have improved in the coming months, both total and foreign , even if companies continue to report difficulties connected with economic and political uncertainty and with high energy prices”.
In this context, a moderate upward revision of the investment plans: “the assessments of worsening investment conditions remain far higher than those of improvement, but the negative balance has halved compared to the previous survey”, continues Via Nazionale. Positive note onoccupation, which is expected to continue growing in the first quarter of the year.
Grow the consumer inflation expectations at least for another year: “reaching 8,1% over 12 months and settling respectively at 6,7 and 5,7% over time horizons of 2 years and between 3 and 5 years. There price dynamics charged by businesses would remain sustained over the next 12 months, albeit decreasing in construction and above all in industry in the strict sense. It would still be driven mainly by higher input prices and higher inflation expectations.
Survey on inflation expectations and business growth: Bank of Italy data
In the fourth quarter of 2022 it decreases to 47% (by 77,9%) the share of companies that considers the general economic situation worsened compared to the previous quarter, largely in favor of stationary assessments; the balance between responses of improvement and worsening returned to -40,7 percentage points. However, prospects of a weak economic situation remain: the great majority of companies (86,1%) assign a zero probability or less than 25% to the possibility that the general economic situation will evolve positively in the first quarter of 2023. To weigh the cost of energy .
For 41,6% of companies in the fourth quarter of 2022 i energy boosts caused similar or greater difficulties compared to the previous three months (from 54,9 in the previous survey). The problems remain more relevant to the construction companies (60%) and ofindustry in the strict sense (44,9%) than those of services (36,4%). Due to high energy costs, almost two out of three companies intend to raise their selling prices in the next three months. The increase will be of marked intensity according to, respectively, 10,2, 10,8 and 8,6% of the companies in the three sectors (from 20,5, 26,5 and 14,9 in the previous survey). Procurement problems for raw materials and intermediate inputs affected 52,6% of companies; compared to the previous quarter, the share is down in all sectors.
The picture of current demand remains weak but expectations are improving
For industrial and service companies, "the assessments of improvement and worsening of overall demand in the fourth quarter were equal (the balance is equal to -0,2 percentage points, from -3,7; for foreign demand, the rose slightly (to 3,0 percentage points from zero), however remaining at low values". While for the first quarter of 2023, we expect a increase in sales: companies expecting an increase in total question and foreign are, respectively, 10,4 and 15,1 percentage points more than those which prefigure a reduction (the balances were negative in the previous survey). In construction, on the other hand, the balances relating to both current (12,3 from 8,4) and expected (22,3 from 15,0) demand trends improved.
Capital accumulation would continue in 2023
The balance between judgments of improvement and worsening of conditions for invest in the fourth quarter it remained largely negative, but halved compared to the previous survey (to -30,2 percentage points). The conditions of credit access, according to Bank of Italy data, are considered stable by around three-quarters of companies, against a deterioration of 21% (as in the previous quarter), while the overall liquidity position has been deemed sufficient or more than sufficient for over 90% of the sample.
Despite the unfavorable assessments on the conditions for investing, the balance between forecast increases and decreases in spending on capital goods remained positive in all sectors, signaling a continuation of accumulation (13,8 percentage points, as in the last survey referring to 2022) . In the first half of 2023, investment spending is expected to increase compared to the previous semester for around 37% of companies, a percentage more than double of those who expect a reduction (16,8%).
The occupation resists
The share of companies in industry in the strict sense and in services that expect to expand the number of employees in the first quarter of 2023 was 11,0 percentage points higher than that of those who anticipate a reduction, an improvement on the previous survey ; in the sector of construction the share remained substantially unchanged (at 11,8 percentage points).
Bank of Italy, business survey: inflation expectations are growing
Expectations on consumer price inflation have grown markedly over the various forecast horizons, reaching the highest levels in all sectors since the start of the survey in 1999. The expected rate of inflation consumption is on average 8,9% in six months (from 7,5 in the previous survey), to 8,1 in 12 months (from 6,9), to 6,7 in 2 years (from 5,7 ,5,7) and to 3 over a horizon of between 5 and 4,9 years (from XNUMX). Expectations, continues via Nazionale, "plausibly had an impact on the concomitant strong increase in the harmonized index of consumer prices in the final months of last year".
Compared to a year earlier, the price lists were revised upwards by an average of 8,4% in industry in the strict sense (from 9,3 in the previous survey), by 3,6 in services (from 3,0) and by 6,3 in construction (from 6,8). In the expectations of businesses, the growth in selling prices would ease in the next 12 months in industry (to 4,1% from 6,1) and construction (to 5,3 from 6,5), while it would accentuate in services ( to 3,9 from 3,7). These further increases would mainly be contributed by i increases in commodity prices and the trend of inflation expectations, followed by the higher cost of intermediate inputs and labour.
