Italy’s Growth Recovery Stabilizing

Like under the three-clue rule, the national statistics agency ISTAT said Italy’s economy grew for the third consecutive month, forecasting “a continuation of the current economic growth pace.”

According to its monthly report for January released Tuesday, based on the indicator used by ISTAT for short-term economic forecasts, Italy’s recovery seems to have stabilized after the uncertainties of the first half of 2016, amid “prospects of improvement of the economic activity for the next months,” ItalyEurope24 reported.

A stronger “recovery of the manufacturing sector, coupled with improving households’ purchasing power and increased investment” played in favor of this cautious optimism–after a year of conflicting signs. But in addition to the positive indicators, there are signs pointing in the opposite direction.

“The consumer confidence index decreased due to a worsening of the current and future economic climate, only partly offset by the improvement of the personal and current climate,” ISTAT said. Bucking the trend, business confidence instead “improved”.

The report takes into account the international scenario, starting from a US economy “showing signs of slowdown” (up 1.9% in the fourth quarter versus a 3.5% growth in the third), while the eurozone’s economic expansion “continues at a moderate pace,” with the economy forecast to grow 1.7% in 2016.

Good news for Italy mostly comes from manufacturing, which increased 0.7% in November  compared to the previous month (+0.9% in the September-November quarter).

Foreign trade was stronger, rising by 2.2% in November. Household consumption slightly increased in the third quarter (0.3%) thanks to higher available income and purchasing power. 

Employment was stable in the fourth quarter, after consistent growth recorded in the first two quarters and a slight increase in the third. The unemployment rate rose from 11.8% in October to 12% in November and December, returning to 2015 levels as more people sought jobs. 

This first “taste” of Italy’s economic performance matches the expectations of the government, which hopes to reduce the fiscal adjustment sought from the EU. 

If the positive forecasts are confirmed, starting from 2016, the government may need less than €3.4 billion ($3.62 billion) expected so far.

A first answer will come on February 14, when ISTAT releases the preliminary data about Italy’s GDP for 2016 (the consolidate reading will be released on March 1).