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Confidence among Italian businesses increased for the second straight month in August on the back of improved assessment on internal and external demand as well as production, research institute ISAE said Tuesday.
The ISAE seasonally adjusted business sentiment index for the manufacturing sector increased to 100.5 in August from 98.3 in July. Economists were looking for a reading of 98.5. The index reading has returned to its May 2008 level, the think tank said.
Manufacturers were more positive about current production and order levels, but their short-term forecasts on both components worsened. The gauge measuring firms' assessment regarding the present order situation improved to minus 20 in August from minus 29 in July. The indicator for production expectations improved to minus 28 from minus 20.
Furthermore, manufacturing firms expect general economic condition to better in the coming months. However, businesses were pessimistic regarding the prospects of order, production and employment.
ISAE's survey among Italian retailers showed that while they have a positive assessment on the current sales position, the outlook remained dull. The confidence indicator for the retail trade sector dropped to 97.6 from 98.8.
Retailers' expectations about the volume of orders and employment conditions in the coming months stabilized compared to the previous month. The indicator measuring confidence among service providers increased to 102.6 from 99.1 in July. The improvement in the reading came mainly from firms' more favorable assessment of the new order position and prospects of the Italian economy.
Confidence index for the construction sector rose slightly to a seasonally adjusted 73.6 in July from 73.1 in June. The rise was backed by improvement in firms' view about the future construction plans.
Data released earlier this month showed that the Italian economy expanded for the second straight quarter, suggesting that the recovery from the worst recession is continuing, despite the currency bloc's debt crisis. Gross domestic product rose 0.4% sequentially in the second quarter, at the same pace as in the first three months of the year.
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