According to our current forecasts, the contraction in Italian GDP recorded in the last quarter of 2022 was only temporary and should be followed by a 0.3% q/q rebound in the first quarter of 2023. However, economic growth is expected to slow down over the course of the year and could fall back into negative territory in the third quarter.
PMI indices continued to rise in March: the composite index improved by 3 points to 55.2, the highest level since November 2021. As elsewhere in the eurozone, the improvement is driven by services – the PMI index in this sector has risen by more than 4 points, from 51.6 in February to 55.7. Conversely, the manufacturing indicator fell in March by 0.9 points to 51.1; however, it remained above the expansion threshold (50). Industrial production has fallen slightly in recent months, dropping below its pre-pandemic level in February.
Italy: Economic indicators quarterly changes
The sharp drop in inflation in March (-1.7 points to 8.1% y/y) enabled household confidence to recover somewhat, in the absence of a real upturn: according to Istat, household confidence rose to its highest level in a year in March, thanks to an expected improvement in personal finance and the labour market. In particular, the one-year outlook for unemployment is the weakest since the first lockdown in spring 2020. Although they are far below inflation, contractual hourly wages are growing more quickly: they were up 2.3% y/y in February compared to 1.6% two months earlier.
GDP Growth
Since last June, the unemployment rate has remained stable at around 8%. However, employment continued to grow and reached a new record in February, as did the participation rate for this month, which stood at 66.2%. Nevertheless, the labour force grew at the same time (+0.3% since June 2022), which limited the drop in the jobless rate.
Guillaume Derrien (article completed on 18/04/2023)
