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Italian consumer and service-sector confidence has risen, while industry has slipped. Overall, the picture remains consistent with a very gradual exit from stagnation and still points to modest quarterly GDP growth in the fourth quarter.
 

Consumers regain confidence

After a clear drop in November, Italian consumer confidence rebounded in December, returning to the yearly average. Households reported better economic conditions and stronger family budgets. Expectations for future unemployment declined again, and the indicator for buying durable goods improved sharply. This mix of factors could support a recovery in consumption – the demand component that underperformed in 2025. Job resilience remains a positive driver, but an incomplete recovery in purchasing power calls for caution. In the short term, consumption growth is likely to stay very gradual.
 

Business confidence rises, but unevenly

The aggregate business confidence index posted its highest level since March 2024, driven mainly by strong gains in services, which more than offset the decline in industry.
 

Services confidence surges, led by tourism

Order books and business outlook improved markedly in services. Tourism led the way here, with confidence back to March 2024 levels – likely boosted by demand linked to the upcoming Milan-Cortina Winter Olympics. This may also explain part of the recovery in information and communication. Confidence among business service providers also improved.
 

A small setback for manufacturing...

Industry looks less upbeat. Manufacturing confidence slipped slightly, though it remains above third-quarter levels. Consumer and intermediate goods held up better, while capital goods weakened more. The exit from prolonged stagnation is proving slow, hampered by US tariffs on exports. Domestic demand lacks momentum, but foreign demand could pick up in the coming months thanks to Germany’s infrastructure and defence investment plans.
 

...and for construction, even in infrastructure

Confidence also fell in construction. The decline among building firms reflects the adjustment after the end of the 'superbonus'. More concerning is the sharp drop in civil engineering, where PNRR-funded projects are concentrated. A confidence dip so close to the programme’s August 2026 deadline deserves attention.
 

Still consistent with mild GDP growth in the fourth quarter

Overall, December confidence data supports the view of a very gradual recovery in Italy’s economy. On the supply side, services remain the main driver. On the demand side, the upcoming Winter Olympics could help rebalance consumption and investment. We confirm our GDP growth forecast of 0.6% for 2025 and 0.8% for 2026.

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