Business Confidence Drops

Italian business confidence declined in November, hardly dramatically - to 96.8 from 97.1 in October - but the outlook for the Italian economy over the next three months fell to minus 9, the lowest in at least nine months. My feeling is that people have been much too focused on this years good results and have not given sufficient attention to the situation moving forward which will be all important in determining how successful the Prodi government is in addressing the government deficit problem.

Italian business confidence fell in November on concern that a global economic slowdown would hurt exports and crimp growth in Europe's fourth-largest economy.

The Isae Institute's confidence index fell to 96.8 from 97.1 in October, the state-funded research center said today in Rome. The reading matched the median forecast of 24 economists surveyed by Bloomberg News.

``The slowdown in the U.S. is a concern, given that there's no balance in the Italian economy,'' said Robert Perry, an economist at 4Cast Ltd. in London. ``As foreign demand fades, the question is, are there sufficient domestic drivers to keep it going?''

The U.S. economy, the world's largest, expanded at the slowest annual pace in more than three years in the third quarter, weighing on European exports. France's economy stalled in the third quarter and Germany grew less than economists' forecasts, threatening to crimp growth in Italy, which has lagged behind the euro-zone for a decade.

``Expectations fell this month for production levels, but also for the prospects for the Italian economic situation,'' Isae said in today's report. An index measuring the outlook for the Italian economy over the next three months fell to minus 9, the lowest in at least nine months.