Signs of improvement for the Italian economy. Even if in January the consumer confidence index recorded a decrease linked to the worsening economic climate, only partially attenuated by the improvement in the personal and current climate, business confidence improved in all the main sectors with the exception of retail trade and the leading indicator signals prospects for an improvement in economic activity for the coming months. Istat notes this in its monthly note on the trend of the Italian economy, in which it reviews the main issues of the economic situation.
1) POSITIVE SIGNS CONTINUE FROM MANUFACTURING COMPANIES
In November - recalls Istat - industrial production net of construction recorded an improvement compared to the previous month (+0,7%). On average for the September-November quarter, the index increased by 0,9% on a quarterly basis driven by the robust growth of energy (+7,5%), while durable consumer goods and capital goods recorded a decrease (respectively -1,0% and -0,6%). On average for the September-November quarter, the industry turnover index increased by 0,2% compared to the previous three months as a synthesis of a slightly negative variation on the domestic market (-0,1%) and an improvement in sales on foreign markets (+0,7%). Quarterly growth benefited from the positive contribution of all industry sectors with the exception of durable consumer goods (-0,9%). In the same period, orders recorded a significant reduction (-2,3%), mainly driven by the contraction of the foreign component (-5,0%).
In November foreign trade showed signs of recovery: exports grew (+2,2% compared to the previous month) supported by the growth of trade both with the EU area and with non-EU countries. Imports showed a more limited increase (+1,7%) due to the decline in purchases of durable consumer goods (-3,1%). In December, the intensification of trade flows with non-EU countries continued, with a more sustained dynamics of imports (+6,5%) compared to exports (+2,5%). Purchases of energy and capital goods showed marked growth compared to the previous month (+14,4% and +8,2% respectively).
In November 2016, the seasonally adjusted index of construction production recorded an increase of 2,0% compared to the previous month. On average for the September-November quarter, however, the index recorded a heavy cyclical decline (-1,8%).
In the second quarter of 2016, compared to the same period of the previous year, the data on building permits signal, for the first time in 5 years, an increase in the usable habitable area for new homes (+9,1%), while for the non-residential sector recorded a new fall (-7,5%). In the third quarter of 2016, the price index of homes purchased by households, both for residential purposes and for investment, increased by 0,1% compared to the previous quarter. In the same period, according to data released by the Revenue Agency's Real Estate Market Observatory, the number of sales of residential real estate units grew by 17,4% in trend terms.
2) HOUSEHOLD CONSUMPTION, THE KNOTS OF EMPLOYMENT, INCREASE
In the third quarter of 2016, Italian household consumption increased by 0,3% compared to the previous quarter, favored by the increase in disposable income and purchasing power. The propensity to save of consumer families was 9,3%, down by 0,1 percentage points compared to the previous quarter. In the fourth quarter of 2016, employment remained stable after the strong growth recorded in the first two quarters and the slight decline in Q3. However, permanent employees decreased compared to the third quarter (-0,3%, -39 thousand units), against an increase in temporary employees (+1%, +25 thousand units) and independent employees ( +0,2%, +8 thousand units). Again in the fourth quarter, the recovery in employment concerned only the over-1,3s (+XNUMX%), while a reduction in employment was recorded for all other age groups.
In the press release referring to the December data, Istat released for the first time an analysis of the effect of the demographic component on the trend changes in employment by age group. Net of the demographic effects, the most consistent manifestation of which is the increase in the population aged 50 and over, in December the employment performance was, on a trend basis, positive in all age groups. In particular, employment for the 15-49 age group, net of the demographic decline, would be positive (+76 thousand units).
The unemployment rate rose during the quarter from 11,8% (October) to 12% (November and December), thus returning to the levels of the beginning of 2015. The aggregate of jobseekers increased significantly (+2,6% compared to the third quarter): the increase was recorded for both genders and for all age groups and occurred against an overall decrease in inactive people (-0,6%). The data relating to the third quarter of 2016 had already highlighted a decrease in the inactive group closest to the labor market (the potential workforce, -5,7% compared to the third quarter of 2016) and the so-called "discouraged" (i.e. inactive people who have stopped looking for work because they think they can't find it, -10,2% the percentage trend variation).
These trends reflect the intensification of job search actions. On average in 2016, hourly wages grew by 0,6% compared to the previous year. However, the share of employees awaiting renewal for the total economy remains high (50,5%).
3) PRICES, SIGNS OF STRENGTHENING INFLATION ARE CONFIRMED
In January 2017, the signs of a strengthening of consumer price inflation that emerged in the final months of last year were confirmed, substantially linked to the conditions of the external situation. In the absence of relevant push factors of an endogenous nature, the underlying component stands at historically low growth rates. After the increase recorded in December (+0,5% on an annual basis), the price index for the entire community (NIC) is accelerating on a trend basis (+0,9% the highest change since September 2013 ). The recovery was affected by the increases in fresh food prices caused by adverse climatic factors and by the progressive recovery in the prices of energy goods.
Excluding the last two groupings, the dynamics of prices is still contained, and slowing down again, settling at +0,5%, a level similar to the average of 2016. The producer prices of industrial products destined for the domestic market are gradually incorporating the increases in inputs imported from abroad, but non-food consumer goods continue to maintain a slightly negative annual trend (-0,2%). Expectations indicate that the process of price growth should continue in the next few months, however the orientation of economic operators appears to be different: while for consumers the expectations of price increases are significantly strengthened, among entrepreneurs who produce goods for final consumption the prevailing still a certain caution in the increases of its price lists.
