Italian consumer confidence increased more than economists forecast in September to the highest in two years amid optimism that the economy is emerging from recession.
The confidence index rose to 101.1 from a revised 98.4 in August, the Italian statistics office Istat said in Rome today. That was the highest since June 2011. The median estimate of 11 economists surveyed by Bloomberg was for a reading of 98.5. Istat questioned 2,000 Italians in the first half of this month.
“The survey shows some improvement in the current climate and economic situation, probably supported by less restrictive fiscal conditions,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, said in an e-mailed note to investors. “Italian households remain cautious on future developments, well aware that the political situation remains at risk.”
Italy’s unemployment rate fell for a second month in July to 12 percent, signaling companies may be less reluctant to hire as the longest recession since World War II eases. Prime Minister Enrico Letta’s government last month canceled controversial property-tax payments on primary residences due this year, possibly boosting consumers’ outlook.
Letta’s coalition is fraying amid the legal troubles of his ally, former Prime Minister Silvio Berlusconi. His Democratic Party is seeking to strip Berlusconi of his Senate seat due to the former premier’s tax fraud conviction. Berlusconi’s People of Liberty party has threatened to topple the government if he is expelled.
Gauges of Italians’ sentiment about the current economic situation and their employment expectations rose, today’s report showed. Istat initially reported the August consumer confidence index at 98.3.
“Consumption is certainly going better than before,” Lars Petersson, chief executive officer of Ikea Italy, told Francine Lacqua and Guy Johnson on Bloomberg Television’s “The Pulse” today. “Seeing consumer confidence going up, we hope that that will be translated also into consumption.”
While the economy of the 17-nation euro region returned to growth in the second quarter, Italy’s shrank 0.3 percent as unemployment restrained consumer demand. The government forecasts the economy will resume growth next quarter and continue to expand in 2014, Finance Minister Fabrizio Saccomanni said Sept. 8.
Letta, speaking with Bloomberg Television’s Erik Schatzker in an interview yesterday, reiterated his promise to ensure Italy remains within the European Union’s budget-deficit limit of 3 percent of gross domestic product this year. He said he’ll achieve the goal through fiscal adjustments and cuts in spending. He declined to say whether he’ll stop a value-added tax rise planned for Oct. 1.