Italy: economic indicators monthly changes
Household confidence has dropped slightly since April. This reflects a decline in purchasing intentions for durable goods and a deterioration in the outlook for unemployment. Nevertheless, the Italian labour market remains on track. Unemployment fell to 7.3% in August, its lowest rate in fifteen years. As a result of this drop, recruitment problems are intensifying: the proportion of companies citing labour shortages as a factor limiting production was, in Q2 2023, the largest seen since the early 1990s. Although the working population is far from having closed the gap between the levels seen in 2019 (the deficit was 1.3% in August compared to the peak in April 2019), employment has continued to rise very significantly. This has helped to raise the employment rate (to 61.5% for 15-64 year olds) to a level not seen in at least twenty years, the current statistics going back only to 2004).
GDP growthDespite a tighter labour market, the increase in wages remains limited. The latter was up 3.2% y/y and is still significantly below inflation, which rose almost twice as fast in September, to 5.6%. Italian household purchasing power thus continues to contract, which is holding back private consumption. While not having fallen, private consumption is hovering just above its 2019 levels. There is also significant divergence in trajectory between the various consumption items; On the one hand, spending on services and durable goods are relatively high, having risen since the beginning of the year. On the other hand, consumption of non-durable goods is falling. This decline corroborates the drop seen in retail sales for several months now, mainly due to lower food consumption, which touched a twenty-year low in September.
After a contraction in Q2 (-0.4% q/q), real GDP should nevertheless pick up again in Q3, helped by a slightly more favourable inflationary environment. A further slowdown is expected in Q4. Growth for 2023 will remain moderate at 0.8% but higher than our expectations for the euro zone as a whole (+0.5%).
Article completed on 16 October 2023
