Italian Business Confidence At Its Lowest Level in Seven Years In June

Italian business confidence fell to its lowest in seven years in July as rising oil costs and a stronger euro damaged prospects for economic growth. The Isae Institute's business confidence index dropped to 83.5 from a revised 86.7 in June the Rome-based research center said today. That's the lowest since October 2001.



A measure of total orders fell to minus 22 from minus 18 in June, and the three-month outlook for production declined to 5 from 10. Businesses expect prices to keeping rising in the next three months, with an index measuring cost expectations increasing to 19 from 16 in June.

Italy's economy will expand 0.5 percent this year and the next, according to the most recent International Monetary Fund forceast (last week). That would be the worst performance among the world's advanced economies (there are 31 of them), as defined by the IMF: the Group of Seven countries, plus the remaining euro 15, Denmark and Sweden, plus Australia, Hong Kong, Iceland, Israel, South Korea, New Zealand, Norway, Singapore, Switzerland and Taiwan.

Meanwhile fears the once-resilient euro-zone economy could fall into recession increased today after two closely-watched gauges of economic sentiment and activity posted larger-than-expected declines.

The Munich-based Ifo Institute's German business climate index plunged to its lowest level since September 2005. Separately, the preliminary July RBS/Markit composite purchasing managers index - a gauge of activity across the manufacturing and services sector - fell to its lowest level since November 2001.