Italy’s Consumer Confidence Rose: Tourism Took a Back Seat
Why Rate Cuts and Moderating House Prices Impact the Indicators
Italy consumer confidence rose to 112.7 in September 2015
Italy’s consumer confidence rose by 3.10% to 112.7 in September—compared to 109.3 in August 2015. The rise was led by all of the components like economic, personal, current, and future confidence. They rose by 7.59%, 2.20% 3.80%, and 3.70%, respectively.
EWI rose with growing consumer confidence
With consumer confidence rising, Italy-focused ETFs like the iShares MSCI Italy Capped (EWI) rose by 4.10% YTD (year-to-date) as of September 2015. Consumer discretionary stocks like Luxottica Group SpA (LUX), Pirelli & C. SpA (PPAMF), and Fiat Chrysler Automobiles N.V. (FCAM) rose by 24.40%, 24.80%, and 6.60%, respectively, over the same period.
Industrial stocks outperformed with increased manufacturing data
Italy recorded a rise of 2.20% in business confidence in September 2015. The index stood at 106.2 in September—compared to 103.9 in August 2015. Manufacturing contributed to the uptrend. It rose to 104.2 in September—a rise of 1.50% from August. Also, orderbooks and production expectations showed improvements while the inventories level remained stable. With better numbers, industrial stock like Atlantia SpA (ATASY) and Finmeccanica SpA (FINMY) rose by 12.90% and 34.20% over the past year as of September 25.
Tourism index fell by 11.10% in September 2015
The construction confidence component improved to 123.3 while the market services component rose to 112.2. Home furnishings and fixtures stock, Natuzzi SpA (NTZ) rose by 21.90% YTD (year-to-date) as of September 2015. A fall was recorded in transportation and storage and tourism services of 2.20% and 11.10%, respectively. A slowdown in tourism may impact the country’s growth profile. According to the World Travel and Tourism Council, the total contribution of travel and tourism to Italy’s GDP (gross domestic product) was 10.10% in 2014. It’s forecast to rise by 1.70% in 2015. Over the past year, Eni SpA (E) fell 34% as of September 28.
The information and communication component rose from 102.5 to 106.3. Business services and other services recorded a rise from 101.8 to 106.4. Even the retail trade confidence index rose from 107.8 to 108.8. The confidence rose 0.28% and 2.10% in large scale distributions and small and medium size distribution, respectively. Telecom stocks like Prysmian S.p.A. (PRYMY) and Telecom Italia S.p.A. (TI) rose 13.40% and 17.60%, respectively, over the past year as of September 25.
Italy has a structural problem. It has a high level of public debt and weak economic growth. However, with a rise in consumer and business confidence, it could boost the economy and revive growth at a decent pace.
The United Kingdom also released its home price data. We’ll discuss this in the next part.
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