Italian Confidence Recovery Continues Unabated In June

Hard data set to improve over 2H21, barring pandemic adverse developments

When trying to draw conclusions about the implications for 2Q21 GDP growth, we need to confront the scarcity of available hard data. Data for April shows that industrial production started the quarter on a strong footing, while retail sales were soft-ish, suggesting that the existing restrictions were still weighing on contact-intensive sectors. Labor market data was also mixed, with a very small increase in employment, which remained some 800K units lower than in pre-Covid times, and the unemployment rate on the rise. The cross-sector acceleration in confidence seen in May and June suggests that the re-openings should have done more than bringing higher spirits inducing a clear acceleration in value-added generation also in services over the second half of the quarter.

Looking further out into 2H21, with the vaccination campaign running at target cruising speed and barring a new round of widespread restrictions due to the Covid-19 delta variant, the macroeconomic picture looks set to improve further. All good, but we will have to keep an eye on labor market developments: starting from July, the redundancy ban currently in place will be lifted for many sectors, potentially adding some cautiousness in consumer's spirits.

Today’s confidence data release adds upside risks to our current forecast of a 4.3% GDP growth in 2021.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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