ROME (ITALPRESS) – Rather than thinning out the shadows, the summer months seem to have consolidated the climate of uncertainty about the economy’s near-term prospects, with some signs of a slowdown emerging. Beyond the difficulties in industry, which is suffering from disappointing trends in foreign and domestic demand, symptoms of fragility are also beginning to be registered among services. This is what emerges from the Conjuntura of the Confcommercio Studies Office, presented at a briefing. “Our estimate for GDP in the third quarter is of a zero change in the economy, corresponding to growth of 0.6 percent from a year earlier,” Confcommercio explains. “This assessment, again based on seasonally adjusted data and corrected for calendar effects, is a summary of a reduction in July, slightly higher than our preliminary estimates partly due to a less favorable tourism trend, and a modest recovery in August, which was followed by stagnation in September. Monthly fluctuations in economic indicators then summarized in monthly GDP betray the lack of a clear direction of travel for the Italian economy. Meanwhile, the third quarter has been lost. The focus is on the fourth. “In fact, Confcommercio points out, with this arithmetic, it would complicate the possibility of GDP growth for 2024 around or slightly above 1 percent, except then for the likely upward correction of the estimate for the year as a whole due to the fact that 2024 has 4 more working days than 2023. It is also hoped that the upcoming revision of the accounts by Istat will procure favorable surprises not only on the current levels of output but also on the quarterly profiles in real values. “Neglecting mere conjecture,” the note continues, “the fact remains that in this context there is no shortage, however, of some very positive elements, on the evolution of which will depend whether or not good performance for the current year will be achieved. The labor market confirms its dynamism, with the number of employed people reaching an all-time high in July, and inflation remains at contained values: for September our estimate is of a zero change in the economy and year-on-year growth of 0.9 percent. These now-established figures imply an improvement in real disposable income, already recorded in the first quarter thanks to contract renewals. However, the income-confidence-consumption chain seems to have jammed. Household spending is not growing, or at least not growing as much as it could. Probably a new growth in confidence in September and October would bring this wait-and-see phase out of momentum. But that’s a process all to be built, along with decisive growth in the last quarter of the year. “Consumption, measured in the CCI’s raw data metric, recorded in August, after the stimulus effect on automobiles was over, a subdued year-on-year growth of 0.5 percent.Goods are essentially stationary and services show a 1.2 percent change. Supporting the stabilization of demand, the seasonally adjusted figure shows a 0.1 percent decline over July for the indicator and a stagnation in consumption for services.Without the boost of consumption, there is no growth.The Confcommercio Consumer Indicator showed a 0.5 percent growth over the same month in 2023. The figure follows a 1.4 percent growth in July, a development largely conditioned by private demand for cars. The increase in the last month is a synthesis of a very subdued change in demand for goods (+0.1 percent in the annual comparison) matched by a 1.2 percent growth in services, a slight improvement over the previous two months’ results.The weakness in demand and the trend toward a generalized slowdown is summarized by the 0.1 percent decrease in the seasonally adjusted economic data, within which the stagnation of consumption for services is noted.The estimates for August 2024 confirm, Confcommercio points out, at the level of macro spending functions, an articulated trend marked by a generalized slowdown. With regard to leisure services, which had also significantly supported demand in the first part of 2024, the signs of slowdown, already observed in the second quarter, seem to be confirmed in the summer months as well. The most dynamic component is recreational services (2.0 percent), while for hotels and public establishments the dynamics appear more subdued (+0.6 percent). Although in provisional form, data for June and July indicate a moderate reduction in tourist presences in Italy, with the resident component in July declining problematically (-6.2% trend). The first seven months as a whole would, however, still indicate growth of more than 2 percent over 2023.After improvements in June and July, the automotive sector returned to negative territory in August (-9.1 percent), signaling how broader interventions are needed to revitalize a sector that has long been struggling. Elements of weakness continue to affect, perhaps structurally, other more traditional consumer segments as well. In this perspective can be read the decline, also detected in August 2024, in demand for clothing and footwear (-2.0 percent on an annual basis), a figure that aggravates an already difficult situation that does not seem to have been improved by the sales season.Similar assessments can be made for the segment related to furniture and furnishings (-1.3 percent) and tobacco (-3.7 percent).By contrast, air transportation (+11.2 percent) and demand for electricity (+8.5 percent) remain in decidedly positive territory. Positive dynamics are also noted for communication goods and services (+3.6%), household appliances (+2.5%), fuels (+1.6%) and food (+0.9%). The figure for the latter segment, however, should also be evaluated with extreme caution in light of the substantial declines in demand recorded in recent years.Based on the dynamics recorded by the various variables that contribute to the formation of consumer prices, Confcommercio estimates for September 2024 a zero change in the index in cyclical terms and growth of 0.9 percent on an annual basis. The contained slowdown is in line with expectations and consolidates estimates of a change close to 1 percent in the average for 2024 even in the presence of possible transitory upturns in the annual comparison due to statistical effects.The disappearance of inflation especially for those goods and services that households buy most frequently together with recoveries on the payroll front, could help restore the momentum in consumption necessary to revitalize the fragile growth prospects. “Rising employment and inflation under control tell us that our economy is in good health. However, the climate of uncertainty and the weakness of consumption are worrying,” comments Confcommercio President Carlo Sangalli. “With the new budget law, we need to confirm the cut in the tax wedge, the amalgamation of IRPEF rates and gradually and structurally reduce the tax burden on families and businesses.
– Photo: Photogram Agency -(ITALPRESS).
