Italy Consumer Confidence Unexpectedly Rebounded This Month
Italian consumer confidence unexpectedly rose from a record low even amid signs that the country’s fourth recession since 2001 will deepen amid the euro region’s debt crisis.
The confidence index rose to 86.5 from a revised 85.4 in June, the national statistics office, Istat, said in Rome today. Last month’s reading was the lowest since the data series began in 1996. Economists forecast the index to fall in July to 85, according to the median of 14 estimates in a Bloomberg News survey.
Italy’s economy shrank for a third straight quarter in the first three months of 2012 as the debt crisis worsened and Prime Minister Mario Monti’s austerity measures pushed the country deeper into the recession, its fourth since 2001. The nation’s debt financing costs are cutting potential growth in the euro region’s third-biggest economy by as much as 0.9 percent, employers’ lobby Confindustria said in a July 19 report. The country’s 10-year bond yield climbed this week to the highest since January.
Homeowners in Italy made their first payments of a new property levy, known as IMU, last month, marking the return of taxation on primary residences after four years. The levy was part of the 20 billion-euro ($24 billion) austerity package the government passed in December to narrow the deficit and contain the debt burden, Europe’s second-biggest.
The economy contracted more than 0.5 percent in the three months through June amid the European debt crisis and declining domestic demand, the Bank of Italy said on July 17. The drop in gross domestic product was “slightly more than half a percentage point” in the period, the central bank said in its quarterly economic bulletin.
The economic outlook “remains marked by the weakness of domestic demand, which is due to both the worsening of funding conditions and the effect of the measures to correct public finances passed last year on households’ available income,” the Rome-based bank also said, adding that the recession probably will end at the beginning of 2013.
The economy will shrink 2.4 percent this year and another 0.3 percent next as rising taxes and joblessness cause a slump in consumer spending, Confindustria said in a June 28 report. Italy’s unemployment rate, close to a 12-year high of more than 10 percent, will keep rising through 2013, it said.
Istat originally reported a confidence index reading of 85.3 in June. The release of today’s report was delayed by 30 minutes due to a protest by the institute’s researchers.
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