Italy: Conflicting signals from manufacturing and services confidence indicators – ING

Paolo Pizzoli, senior economist at ING, suggests that the Italy’s last batch of confidence indicators has painted a mixed picture for the economy over the course of 1Q19.

Key Quotes

“On the manufacturing front the situation is still negative, likely reflecting the lingering problems related to the unresolved trade dispute between the US, China and Europe, to which the car manufacturing Italian supply chain is clearly exposed. In March both the manufacturing business confidence and the relevant PMI continued contracting, driven by a deterioration in order books.”

“If a continuation of manufacturing weakness was well on the cards, the rebound in services confidence instead was a welcome surprise. This was particularly marked in the service PMI, as its March 53.1 reading (was 50.4 in February) was the highest since September 2018.”

“A marginal 0.1% GDP contraction in 1Q19 is our base case, but chances of a flat reading have increased.”