The economy of Le Marche resumed growth in 2006. According to estimates by SVIMEZ, regional output grew by 2.2 per cent, a faster rate than for the country as a whole (1.9 per cent). Economic indicators, which had already been improving since the middle of 2005, confirmed their performance. However, signs of a slowdown have emerged in the early months of 2007, mainly associated with export demand. Confidence among firms remains strong.
According to the Bank of Italy's survey of firms, turnover growth in manufacturing accelerated from 2.9 per cent at constant prices in 2005 to 6.9 per cent in 2006. The firms interviewed expected a similar performance in 2007. The recovery involved all the main industries in the region (engineering, footwear and furniture). The shipping industry, which had recorded fast growth for several years, continued to gain strength.
Exports from Le Marche increased by 11.2 per cent at current prices, excluding intra-group operations in the pharmaceutical industry. They were boosted by demand from the euro area and above all from eastern Europe. The economic recovery, clearly led by international demand, may have been fostered also by changes of strategy introduced between 2000 and 2006 by more than 60 of the firms interviewed by the Bank of Italy. Firms operating in traditional branches as well as those in high-tech sectors altered their range of products, opened up abroad and invested in their trademark.
Fixed capital formation in industry picked up in 2006, even beyond the level stated in plans drawn up at the beginning of the year, rising by about 10 per cent in nominal terms.
In the construction industry, although the protracted expansion in private residential building had appeared to come to a halt in 2005, growth resumed in 2006 in response to tax incentives for renovation work. The volume of property transactions and the prices of housing continued to rise, although at a slightly slower pace than before.
The service sector registered an upturn in demand. According to ISTAT, employment in the sector rose by 4.3 per cent, providing the largest contribution to the growth in overall employment.
According to the Bank of Italy's survey of more than 80 non-financial service companies in the private sector, turnover rose by close to 7 per cent at current prices. Wholesale and retail sales accelerated slightly. Arrivals and overnight stays of tourists picked up.
The number of persons in employment rose in 2006, by 2 per cent according to ISTAT, more than half of them with fixed-term and above all part-time contracts. However, the increase is less marked when calculated in terms of full-time equivalent workers. The unemployment rate edged down to 4.5 per cent and the employment rate rose to 64.4 per cent. Compared with the Centre and North of the country the employment rate is higher in Le Marche, although it remains lower among young people.
The region's schools rank among the first in the country for number of students obtaining an upper-secondary school-leaving diploma and for results in official assessments. The proportion going on to university is higher than the national average, but science students account for less than a third of the total, as in the country as a whole. However, graduates from universities in Le Marche have greater difficulty finding permanent work suited to their qualifications than graduates in the Centre and North.
Bank lending increased by 7.4 per cent in 2006. Excluding intra-group operations with finance companies, lending accelerated slightly from the previous year. The result reflected divergent trends in disbursements to the two main customer segments. Loans to households, largely consisting of mortgages, continued to increase steadily although at a slower pace than in 2005; the average value of mortgages rose further. In some cases banks and households renegotiated existing mortgages, replacing them with new products that would limit the amount of the single instalments either by lengthening the maturity of the loan or allowing fixed instalments of variable duration.
Credit to the corporate sector accelerated in response to the economic recovery and the upturn in investment. All branches of production were involved, including manufacturing, where credit had stagnated for several years. Lending to construction firms accelerated further. An analysis of corporate balance sheets shows an increase in leverage in recent years, particularly among construction firms and smaller manufacturing companies. Finally, loans to local government bodies grew sharply. Interest rates on loans went up from 5.4 to 6.3 per cent.
The quality of credit remained good. The rate of downgrading to bad debt status fell to 1 per cent overall, although it rose among small firms in traditional sectors of production.
Households channelled their savings into low-yield and low-risk financial instruments, a trend evident throughout the country. Bank fund-raising accelerated to growth of 6.8 per cent, particularly the highly liquid segment, while government securities deposited with banks, especially short-term and variable-rate bonds, picked up. By contrast, households sold investment fund units and non-bank bonds and reduced funds in individually managed portfolios and life insurance policies taken out through banks.
The banks increased the number of branches in the region and expanded considerably their Internet-banking services.
