Italy Retail Sales December 2007

Italian retail sales declined for a 10th month in December as a bleaker economic outlook damped consumer demand during the busiest shopping period of the year, according to the latest reading on the Bloomberg purchasing managers index. The seasonally adjusted index of retail sales dropped to 44.7 from 45.3 in November, according to a survey of 440 executives compiled for Bloomberg LP by NTC Economics Ltd. The reading has been below 50, the level that signals a contraction in sales, since February.

>A 58 percent jump in oil prices this year is raising energy costs and leaving households with less money to spend on consumer goods. Italy's inflation rate jumped to a two-year high in November and consumer confidence fell to a four-month low in December on signs of an economic slowdown.

The Organization for Economic Cooperation and Development and Confindustria, Italy's biggest employers' lobby, cut their forecasts for 2008 growth in Italy in December. The OECD lowered its estimate to 1.3 percent and Confindustria said growth in Europe's fourth-biggest economy would slow to 1 percent from 1.8 percent this year, citing the rising cost of food and oil.

A three-day lorry drivers strike earlier in December caused temporary shortages of food, gasoline and medicine throughout the country, and some retailers polled by NTC reported a "negative impact" on sales.

The pace of Italian household spending, which constitutes two-thirds of the Italian economy, slowed across 2007, growing by just 0.2 percent in the third quarter compared with 0.6 percent in the second quarter, national statistics office Istat said Dec. 7.




About 35 percent of retailers surveyed said they missed their sales targets this month, with only 7 percent reporting they beat their expectations. ``The disappointing performance during the key Christmas trading period was largely due to surprising weakness in consumers' disposable income,'' NTC said.

Italy's debt-payment costs jumped in 2007 as rising interest rates forced the government to offer investors more to buy its bonds. The average yield on the government's more than 1.6 trillion euros ($2.4 trillion) of debt, the largest in the European Union, rose to 4.14 percent this year, from 3.34 percent in 2006, the Treasury said in a report from Rome today.

Merry Xmas and A Happy New Year

Well, a Merry Xmas and a Happy New Year to all my readers. Thank you for taking the time and trouble to pass-by. This blog will now - failing major and surprising new developments in the global economy - be offline till the end of the first week in January, or till after the festival of Los Reyes Magos in Spain (for those of you who know what this is all about). Come to think of it, maybe this is just what our ever hopeful central bankers are in need of even as I write - some surprise presents from the three wise men - but I fear that this year if these worthy gentlemen do somehow show at the next G7 meet, the star in the east which draws them will not be the one described in the traditional texts, but in all likelihood the rising star of India.



Credit crunch, did someone use the expression credit crunch?

Italian Business Confidence December 2007

Italian business confidence declined to a two-year low in December after a strike by lorry driver disrupted production and as manufacturers brace themselves for the likelihood of slower growth. The Isae Institute's business confidence index fell to 91.8 from a revised 92.1 in November, the Rome-based research center reported today. That is the lowest since December 2005, when the index reached 91.5.



A sub-index measuring manufacturers' expectations for production in the next three months fell to 11, the lowest since July 2005.

``The short-term production outlook probably is being hurt by the declining forecasts regarding the international growth cycle,'' Isae said.

The Organization for Economic Cooperation and Development predicted on Dec. 6 that eurozone growth will slow to 1.9 percent next year from 2.6 percent in 2007. The OECD has also cut its forecast for 2008 U.S. growth to 2 percent from 2.5 percent. Non of these predictions may turn out to be accurate, but they are all pointing in the same direction.

Growth in Italy, which is Europe's fourth-biggest economy, has lagged behind the Eurozone average for the last 11 years, and will continue to do so for at least the next two, according to the European Commission in a Nov. 9 forecast.



Confindustria, Italy's largest employers' lobby, on Dec. 14 also cut its forecast for the Italy's economic growth next year to 1 percent, almost half the rate predicted for 2007.

Italy Consumer Confidence December 2007

Italian consumer confidence fell to a four-month low in December as signs that economic growth is slowing prompted households to cut back on spending. The Rome-based Isae Institute's index, based on a survey of 2,000 families, fell to 107 from 107.6 last month.

A 48 percent jump in oil prices this year is raising household energy costs while a lorry driver's strike has disrupted this months delivery of basic foods such as milk, boosting grocery bills. Higher credit costs sparked by rising mortgage defaults in the U.S. are also starting to weigh on consumer optimism in what is still Europe's fourth-largest economy.

The biggest concern expressed by consumers concerned the outlook for the economy. Optimism about the general economic situation fell to 89.6 from 91 with confidence about future prospects dropping to 112.5 from 113.7, Isae said.

Consumer spending has been consistently weak in Italy in recent years. Retail sales declined for a ninth month in November, accordig to the Bloomberg sponsored purchasing managers index showed.



The pace of household spending slowed to 0.2 percent in the third quarter, compared with growth of 0.6 percent in the previous quarter, according to the ISTAT National Accounts data.



Italian economic growth has lagged behind that of most other counties in the eurozone for more than a decade now (the other weak party is Germany in this regard). The Italian government cut its growth forecast (29 Sept) for next year to 1.5 percent from an earlier 1.9 percent forecast. The Italian government is still more optimistic than the European Commission, however, since the latter estimate Italy's 2008 growth rate at 1.4 percent, and there are plenty of downside risks all round here.