Despite the fact that the November retail sales data across the euro region is quite positive, sales in Italy declined when compared with October:
Italian retail sales fell for the second month in November as the government's plan to raise income taxes curtailed spending.
An index of retail sales stood at a seasonally adjusted 48.0 compared with 47.4 in October, according to a survey of 440 retailing executives compiled for Bloomberg LP by NTC Economics Ltd.
Remember that on all these indexes any reading below 50 signals a contraction.
Italian consumers are facing a double whammy as the ECB raises rates at the same time as the government is set to considerably raise taxes (rather than cut spending) to address the deficit problem. Thus Bloomberg:
The higher taxes are hitting Italian consumers at a time that interest rates are also rising, making consumer loans and mortgages more costly.
As they suggest this contrasts with the eurozone sales data:
The drop in retail sales in Italy contrasts with increases in Germany and France. Sales in both those countries rose, lifting the European index to a record high.
Retail-sales growth accelerated in the euro region for a third month in November, giving the European Central Bank more scope to raise interest rates next year, the Bloomberg purchasing managers index showed.
An index of retail sales in the economy of the dozen nations sharing the euro rose to a seasonally adjusted 53.7, the highest in four months, from 52.8 in October, a survey of more than 1,000 retail executives compiled for Bloomberg LP by NTC Economics Ltd. showed today.
Of course rising interest rates also mean a rising euro, and this will also have an impact on Italian exports, although the extent of this impact still remains to be seen.
Paris is looking on the bright side of things, and points us to the latest data on public finances. There is no doubt that 2006 has been an exceptionally good year by Italian standards, but can we be so optimistic for 2007?
Negli ultimi documenti governativi di politica economica - la Relazione previsionale e programmatica per il 2007 con l'annessa Nota di aggiornamento al Dpef - il deficit pubblico stimato per il 2006, al netto dei debiti pregressi legati ai rimborsi Iva sulle autovetture e alla Tav/Ferrovie, si ferma al 3,6% del Pil, rispetto al 4,0% indicato nel Dpef 2007-2011 presentato in luglio e al 4,1% realizzato nel 2005
However if we look at the details we find:
Il miglioramento dei conti proviene quasi tutto dal lato delle entrate tributarie; il gettito fiscale è aumentato, infatti, nel corso di quest'anno in misura ben superiore alle stime iniziali. Nella Relazione trimestrale di cassa di aprile, ultimo atto ufficiale del governo uscente, le entrate tributarie totali erano calcolate in 407 miliardi di euro. Tre mesi dopo, il Dpef alzava la stima a 417 miliardi, che il recente aggiornamento ha portato a 435 miliardi.
A large part of this has undoubtedly come from the exceptionally high growth (again in Italian terms) seen in 2006 (a year which has, after all, broken all global records). If this expansion in receipts is not maintained in 2007, however, the position may once more deteriorate, so there is really no room for complacency here.
Italy Economy Real Time Data Charts
Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Italy related comment. He also maintains a collection of constantly updated Italy economy charts together with short text updates on a Storify dedicated page Italy - Lost in Stagnation?
Wednesday, December 06, 2006
Christian Democrats Leave Berlusconi
Now this is interesting news:
The lines of political battle were redrawn in Italy on Tuesday after a prominent opposition politician withdrew his party from the centre-right coalition led by Silvio Berlusconi, the former premier.
Pier Ferdinando Casini, the most powerful figure in the centrist Christian Democratic party (UDC), said Mr Berlusconi’s House of Freedoms coalition, which ruled Italy for five years until last April’s general election, had no future. Mr Casini, 51, is a former speaker of parliament’s lower house whose ambition is to create a “new centre” in Italian politics that would bring together moderate reformist forces from right and left and give Italy more stable governments.
From this distance it is hard to see just how genuine and realistic Casini's initiative is, but if it does move forward it is, of course, just the kind of thing Italy needs. This move would seem to have two consequences.
Firstly Prodi's coalition suddenly becomes more governable, since the majority is now no longer necessarily a wafer-thin one. Also Prodi is now so dependent on the left of his coalition. This may become important as we move into 2007.
Secondly in the longer run this may provoke a 'realignment of the centre'. The first whiff of this can already be seen:
At least one party leader in Mr Prodi’s centre-left coalition has already welcomed Mr Casini’s action. Clemente Mastella, justice minister, who has often argued in favour of a “new centre”, said his Popular-Udeur party and the UDC should form a pact and fight side by side in the European Parliament elections of 2009.
The lines of political battle were redrawn in Italy on Tuesday after a prominent opposition politician withdrew his party from the centre-right coalition led by Silvio Berlusconi, the former premier.
Pier Ferdinando Casini, the most powerful figure in the centrist Christian Democratic party (UDC), said Mr Berlusconi’s House of Freedoms coalition, which ruled Italy for five years until last April’s general election, had no future. Mr Casini, 51, is a former speaker of parliament’s lower house whose ambition is to create a “new centre” in Italian politics that would bring together moderate reformist forces from right and left and give Italy more stable governments.
From this distance it is hard to see just how genuine and realistic Casini's initiative is, but if it does move forward it is, of course, just the kind of thing Italy needs. This move would seem to have two consequences.
Firstly Prodi's coalition suddenly becomes more governable, since the majority is now no longer necessarily a wafer-thin one. Also Prodi is now so dependent on the left of his coalition. This may become important as we move into 2007.
Secondly in the longer run this may provoke a 'realignment of the centre'. The first whiff of this can already be seen:
At least one party leader in Mr Prodi’s centre-left coalition has already welcomed Mr Casini’s action. Clemente Mastella, justice minister, who has often argued in favour of a “new centre”, said his Popular-Udeur party and the UDC should form a pact and fight side by side in the European Parliament elections of 2009.
Tuesday, December 05, 2006
EU Services Continue To Expand
Latest data across the EU suggest that the services sector is expanding at a slightly more rapid pace:
Growth in European services industries, the biggest part of the economy, unexpectedly accelerated in November, prompting speculation the European Central Bank will keep raising interest rates next year.
Royal Bank of Scotland Group Plc said today its services index, which accounts for about a third of the economy and covers industries such as telecommunications and banking, rose to 57.6, a four-month high, from 56.5 in October.
Of course the composite figure hides a fair degree of country level difference. French services, for example, continued to expand, but at a slighly slower rate, whilst the rate of expansion in Italy accelerated:
Doppia sorpresa positiva dal Pmi servizi. L’indice elaborato da Rbs/Ntc intervistando i direttori agli acquisti delle imprese del settore, è salito novembre sia in Eurolandia che in Italia oltre le attese del mercato.
Nella zona euro, l’indice è passato a 57,6 a novembre dai 56,5 di ottobre, raggiungendo il livello più alto da luglio. Anche in Italia l'indice, predisposto da Rbs/Adaci, ha accelerato passando da 54,1 a 56,2, livello massimo da agosto, superando le attese degli economisti (54) e restando saldamento sopra la soglia dei 50 punti che separa contrazione da espansione. Bene anche il dato tedesco che è cresciuto da 54 a 56,8 mentre in Francia è sceso da 61 a 58,8.
Thanks to Paris for the link.
(Any reading above 50 on these indexes constitutes expansion).
Growth in European services industries, the biggest part of the economy, unexpectedly accelerated in November, prompting speculation the European Central Bank will keep raising interest rates next year.
Royal Bank of Scotland Group Plc said today its services index, which accounts for about a third of the economy and covers industries such as telecommunications and banking, rose to 57.6, a four-month high, from 56.5 in October.
Of course the composite figure hides a fair degree of country level difference. French services, for example, continued to expand, but at a slighly slower rate, whilst the rate of expansion in Italy accelerated:
Doppia sorpresa positiva dal Pmi servizi. L’indice elaborato da Rbs/Ntc intervistando i direttori agli acquisti delle imprese del settore, è salito novembre sia in Eurolandia che in Italia oltre le attese del mercato.
Nella zona euro, l’indice è passato a 57,6 a novembre dai 56,5 di ottobre, raggiungendo il livello più alto da luglio. Anche in Italia l'indice, predisposto da Rbs/Adaci, ha accelerato passando da 54,1 a 56,2, livello massimo da agosto, superando le attese degli economisti (54) e restando saldamento sopra la soglia dei 50 punti che separa contrazione da espansione. Bene anche il dato tedesco che è cresciuto da 54 a 56,8 mentre in Francia è sceso da 61 a 58,8.
Thanks to Paris for the link.
(Any reading above 50 on these indexes constitutes expansion).
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