Morale Boost for Italian Economy

ROME (Reuters) – Morale among Italian businesses and consumers improved unexpectedly in January, according to data released on Wednesday, brightening prospects for the euro zone’s third-largest economy which has faced stagnation in recent months.

National statistics institute ISTAT’s composite business morale index, which combines surveys across the manufacturing, retail, construction, and services sectors, rose to 95.7 from 95.3 in December.

The sub-index measuring morale among manufacturers climbed to 86.8 from 85.9, surpassing the median forecast of 85.5 in a Reuters survey of analysts. This boost, aided by significant improvement in the construction sector, outweighed modest declines in retail and services.

Consumer confidence also saw an uptick this month, rising to 98.2 from 96.3 in December, easily exceeding the median forecast of 96.0 in Reuters’ poll and marking the highest level since September.

Italy’s gross domestic product (GDP) stagnated in the third quarter of last year compared to the previous three months. ISTAT has indicated it expects no substantial increase in its preliminary estimate for Q4 GDP due out on Thursday.

The statistics bureau had forecast last month that full-year 2024 growth would be about 0.5%, which is half the government’s official target of 1.0%. Most analysts and forecasting institutes anticipate this year’s GDP growth to fall well below Rome’s official estimate of 1.2%.