Italy Business Confidence May 2008

Italian business confidence rose for the first time in seven months in May after Silvio Berlusconi's victory in the April national election resolved political uncertaintly to some extent and manufacturers' orders improved, raising slightly the short term prospects for higher production. The Isae Institute's business confidence index rose to 89.6, the highest since February, from a revised 87.6 in April, the Rome-based research center said today. That was the biggest monthly increase in more than a year.

``Confidence is bouncing back a little, but it won't be sustainable,'' said Paolo Pizzoli, an economist at ING Bank NV in Milan. ``When Germany's economy slows, it's going to hurt Italy.''

German growth is helping to offset the effect of a strong euro and rising energy costs. Germany's Ifo survey also rose slightly to 103.5 in May from 102.4, according to a May 21 report.

``The data is in line with what recently emerged from the Ifo survey of German manufacturers,'' Isae said in a statement. ``Businessmen are more optimistic about demand, especially foreign demand, and the outlook for production.''

In terms of the sub indexes, the measure of total orders rose to minus 16 from minus 18 in April, and the three-month outlook for production rose to 14, the highest since November, from 9 in April. An index of foreign orders rose to minus 16 from minus 20.