Business climate penalised by industry. In September, the economic sentiment index remained below its long-term average (99; +0.7 points m/m), held back by industry (-7.8; -0.1 points) with a production index still in negative territory (-17.4) and production forecasts declining (-0.9). This contrasts with the rise in industrial production (+0.7% y/y in July). In services, sentiment is improving (+2.5; +0.2 pts) but activity is struggling to take off. However, expectations for demand in the coming months are rising (6.3, the highest since April 2024; +4.6 pts).
Household confidence improved significantly (+1.1 pts m/m to -15.7) but remains three points below its long-term average. Households anticipate a sharp improvement in the economic and financial situation over the next year. This, combined with the feeling that prices will fall over the coming year, is strengthening their intentions to make major purchases.
The labour market is developing favourably. The unemployment rate rose slightly in August (+0.1pp to 6.0%; -0.4pp y/y). At the same time, the employment rate continued to rise (62.8%; +0.5pp y/y), thanks to an increase in the number of people in employment (24.2 million). Hourly wage growth has slowed significantly since March (+2.8% vs. +4.0% y/y). However, it remains above inflation, which continues to support household purchasing power.
Inflation rebounded slightly in September (+1.8% y/y; +0.2pp m/m) after falling over the last three months. Core inflation remained stable for the second consecutive month at 2.2%. It is expected to decline due to the ongoing slowdown in producer prices (+0.2% y/y in August versus +1.6% in July).
Real GDP growth will remain limited in 2025. After recording a negative change in Q2 (-0.1% q/q) due to a sharp decline in net exports, Italian growth is expected to remain modest in the second half of the year (0.1% and 0.2% in Q3 and Q4). On average for 2025, growth is expected to reach 0.6% and remain below that of the Eurozone (1.3%).
Completed on October 2, 2025.
Our nowcasts for Q3 2025 highlight resilient GDP growth in the Eurozone and France. In Italy and Germany, two economies that suffered a setback in Q2 after a very good Q1, we expect growth to strengthen in Q3 and more markedly in Q4 [...]
The recovery in PMI indices continues despite a decline in industry. In September 2025, the composite PMI reached its highest level since May 2024 (51.2), an improvement attributable to services (51.4) [...]
Rates on new investment loans (irf>5 years) to non-financial corporations in the Eurozone fell very slightly in July 2025 for the second consecutive month. At 3.58%, however, they remained close to their June 2025 level [...]
The decline in the IFO index in September does not impede the upward trend that began in early 2025. The relative weakness in September particularly affected services and retail trade [...]
In France, the improvement in certain sectors is not spreading to others. The composite business climate has been stable for five months, at 96 [...]
In Spain, business confidence strengthened in September and remains well above its long-term average. In industry, the index remains in contraction territory but is improving (-4.7; +1.1 pts m/m) [...]
The composite PMI has been in expansionary territory for five months. However, it fell to 50.1 in September (-3.4 pts m/m), dragged down by the services PMI (50.8; -3.4 pts m/m), which had reached an 18-month high in August [...]
The non-manufacturing ISM fell markedly in September to 50.0. This result was due to a decline in business activity and new orders components. Manufacturing ISM improved to 49.1 in September, driven by output growth (51.0) [...]
The Tankan survey reported an improvement in large Japonese manufacturing companies' sentiment (14) in Q3, including in the motor vehicles sector (10). The overall figure (all enterprises and all industries) remained stable (10) [...]
In the Chinese manufacturing sector, the official PMI has remained in contraction territory since April, but it improved to 49.8 in September. The PMI published by RatingDog (formerly Caixin) also improved (to 51.2 from 50.5 in August and 49 [...]
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