Italian Unemployment at 18-Month High Amid Consumer Doubts

  • Latest data show declining household confidence, retail sales
  • Youth joblessness rises to 40.1%, statistics office Istat says

Italy’s unemployment rate stayed at the highest in a year and a half, reflecting households’ concerns about the growth outlook in the euro region’s third-biggest economy.

The jobless rate remained at 12 percent in December, after the reading for the previous month was revised upwards from a preliminary 11.9 percent , statistics agency Istat said Tuesday in Rome. The median estimate in a Bloomberg survey of 13 analysts called for a fall to 11.8 percent. Youth unemployment rose to 40.1 percent, also the highest since June 2015.

Consumer confidence declined in January as households were unsatisfied with the current situation and grew pessimistic about the economic outlook, Istat said in a separate report last week. The trend was compounded by the latest data on consumption, with retail sales falling in November the most since March on a monthly basis. In mid-January the International Monetary Fund cut its forecast for Italy’s gross domestic product this year and next, citing “elevated political and banking sector uncertainties.”

Italian voters rejected in December a government-sponsored referendum on constitutional reform, leading Prime Minister Matteo Renzi to resign. As soon as his successor Paolo Gentiloni took power, his government earmarked 20 billion euros ($21.4 billion) of public funds to deal with the banks’ crisis situation, saying the measure was needed to avoid problems with credit activity in an industry burdened with about 355 billion euros of doubtful and non-performing loans.

Cost-cut Plans

During 2016 and the early weeks of this year companies including banks and retailers have announced or started implementing cost-reduction plans that are expected to include job cuts.

Earlier in January, Rupert Murdoch’s Italian pay-per-view unit Sky Italia-Srl announced that it will focus investments in “technological infrastructure” at its Milan hub, moving its news division there from Rome. The plan will have an impact on the workforce, the company said.

French retailer Carrefour SA is planning to close two supermarkets in Italy’s northern Piedmont region, shedding about 500 jobs, Les Echos reported on Monday, without citing anyone.

Italy’s loss-making flagship airline Alitalia SpA will in the next few weeks have to hold negotiations with unions on a plan that could include as many as 1,600 job cuts, according to people familiar with the discussions.

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