Italy’s Consumer Confidence Remains Flat After Early-in-the-Year Dive

Consumer is mostly downbeat throughout main EU nations.

Italy’s consumer confidence fell early in 2007 and has remained in a narrowed lower range ever since. Despite an ongoing rise in the Euro and weaker results in other Euro-area economies, in Italy Consumer confidence has continued to move sideways. Its drop this month to 107 from 107.6 leaves it near the lower bound of this new range (see plot above). Confidence is in the bottom third of its range. Italian consumers are very pessimistic in many respects about the year ahead. For the next 12 months ahead they rate the overall situation as the worst in the last 100 months. Unemployment expectations are in the top 13 percent of this range. Consumers rate their financial situation in the past 12 months as in the bottom 10 percent of its range (worse, actually 7.5%-tile) and rate the year-ahead prospects as the worst ever. The environment for household saving is in the top 7% currently but for the year ahead that slips to the bottom 15 percentile. Major purchases responses sort of break the mold for unrelenting pessimism, as consumer feedback rates the past 12 months as being in the 23rd percentile and the next twelve months improve to the still-poor reading of the 38th percentile.

The rest of the EU is also experiencing some consumer angst but not without exception. The indication by GfK that German sentiment in January may be improving is somewhat shocking in the wake of the weak euro figures we have been seeing. Insee reports weaker conditions coming in France featuring concerns about consumer. The weakness in the UK’s recent CBI retail survey and its outlook for January fits right in. In Belgium the retail and wholesale sector index just reported a sharp fall in December. Italy’s consumers have been struggling for some time. It is hard to know about what the fresh and upbeat German responses might mean. German consumers have been so negative all year long and finally they have a Christmas that is far removed from the VAT hike they spent to avoid last year and that impacted sales patterns so much early in 2007. One wonders if that is part of what is going on in Germany. In the rest of the E-zone there seems little evidence of anything that is upbeat for consumers.