As political unrest returns, Italian business and consumer confidence will fall in July


Shoppers walk a shopping street before Christmas amid the spread of the coronavirus disease (Covid-19) in Rome, Italy, Nov. 30, 2020. REUTERS/Guglielmo Mangiapane

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ROME, July 27 (Reuters) – Italian business and consumer morale fell in July, a month that marked a return to political instability in Italy after the collapse of Prime Minister Mario Draghi’s National Unity government, data showed on Wednesday.

The National Institute of Statistics’ ISTAT index of manufacturing confidence fell to 106.7 in July from a revised 109.5 in June, below the 108.0 average forecast by Reuters poll of 10 analysts.

The June figure was previously given as 110.0.

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Estat’s composite business morale index, which combines surveys of the manufacturing, retail, construction and services sectors, fell to 110.8 from 113.4 last year, but the decline in manufacturing and services outpaced improved sentiment among developers and retailers.

Consumer confidence fell to 94.8 this month from 98.3 in June, against the average forecast of 96.6 in a Reuters poll. It was the lowest reading since May 2020.

Draghi lost power last week after three key coalition partners withdrew their support for his 18-month administration. A primary election has been called for September.

The political turmoil comes against a backdrop of challenging economic conditions as Russia invades Ukraine, driving up energy costs and spreading uncertainty for businesses. Read more

EU energy ministers on Tuesday agreed to a proposal for all EU countries to voluntarily reduce gas use by 15% from August to March, with Italy agreeing to a 7% reduction, with some countries agreeing to a reduction.

But despite several headwinds, the euro zone’s third-largest economy appears to be holding out better than expected a few months ago when some economists predicted a slowdown due to inflation.

Draghi’s government cut its April 2022 economic growth forecast to 3.1% from last September’s forecast of 4.7%.

ISTAT provided the following data in its July Manufacturing Confidence Survey.

July June May April

Total Index 106.7 109.5r 109.0r 109.7r

Order level -0.3 6.3r 4.5r 5.4r

Inventories 0.9 1.7 0.4 -0.7

Result View 5.4 7.7r 6.9r 6.7

r=improved

— Reported by Crispian Balmer

crispian.balmer@thomsonreuters.com; Reuters message:

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