Istat’s latest survey delivers a mixed picture of the Italian economy. Consumer confidence is more optimistic than analysts expected, but firms less so, as the government operates with a sharply reduced growth forecast.
Italian consumer confidence recovered in May after two consecutive months of decline. However, the rebound failed to restore confidence to the levels recorded at the start of the year, while business sentiment fell for another month, reaching its lowest point since last September.
Istat‘s consumer confidence index rose from 90.8 to 93.4 in May, with improvement seen across all components: the future component climbed from 82.5 to 87.2, the economic component rose from 82.7 to 86.2, the personal component improved from 93.8 to 96.0, and the current component moved up from 96.9 to 98.0. The result came in well above a median forecast of 90.1 in a Reuters poll of eight analysts.
The business picture was less encouraging. The composite Istat Economic Sentiment Indicator (IESI) fell from 95.1 to 94.1. This represents its lowest reading since September last year. Within the breakdown, the construction confidence climate continued to fall, from 100.8 to 99.4, and market services also declined. The manufacturing confidence climate held steady at 87.9, while the retail trade confidence climate edged up from 100.8 to 101.0, with assessments of current business trends improving for the third consecutive month — though expectations on future sales deteriorated further, with the relevant balance moving from 17.0 to 16.7.
The data arrive at a delicate moment for the Italian economy. The Meloni government last month cut its growth outlook to 0.6% for both this year and next, down from previous targets of 0.7% and 0.8% respectively, citing surging energy prices and ongoing turmoil in the Middle East. The government’s projection of 0.8% growth for 2028 would, if realised, mark six consecutive years of sub-1% expansion.
The May consumer confidence reading, while still below the levels of January and February, suggests Italian households are somewhat more resilient than the broader economic context might imply. Whether the improvement is sustained will depend in part on energy price trajectories and the resolution — or escalation — of the geopolitical pressures currently weighing on the eurozone’s third-largest economy.
