In 2006, economic activity in Sicily showed some signs of improvement, particularly in certain branches of the service sector.
In agriculture, the performance of the main crops varied widely, with a slight upturn in output of cereals but a decline in vegetables, fresh fruit and wine.
In industry, the capacity utilization rate increased and the growth in turnover exceeded the figure for the previous year. Towards the end of 2006 levels of orders declined and inventories of finished goods increased. The firms interviewed for the Bank of Italy's annual survey slightly reduced their investment spending.
Conditions in the construction industry deteriorated in 2006 and employment declined. Some public works projects for primary transport infrastructure continued. Prices of new housing continued to rise.
In the retail and wholesale trade there was a small increase in sales in nominal terms, ending the downturn that had been under way for the previous two years. Large retail outlets saw an improvement in results.
Tourism in Sicily increased for the third year running, with a particularly rapid increase in inflows of foreign visitors. Further investments were made in the creation of new facilities, particularly at the higher end of the market.
Regional exports continued to expand but at a slower pace than last year, even excluding oil products.
The number of people in employment increased in agriculture and the service sector. However, as in 2005 the figures could reflect the regularization of foreign workers. The labour force diminished as the drop in the number of job-seekers exceeded the increase in employment. Although the unemployment rate fell, it remained the highest in the country.
With the improvement in economic conditions in some sectors and the still low level of interest rates overall, bank financing grew at a faster pace than at any other time since 2000. The increase involved loans with a maturity of up to 18 months as well as medium and long-term credit.
The growth in lending to firms reflected an increase not only in mortgages and leasing operations, but also in overdraft facilities for working capital requirements. Household debt continued to rise steadily, although for the first time in five years the rate of increase slowed. As the cost of money rose, a growing number of mortgages were arranged at fixed interest rates.
The quality of loans showed signs of deterioration. There was an increase in new bad debts of customers in Sicily, including as a ratio of total bank loans.
Bank fund-raising continued to expand, although at a slightly slower pace than in recent years. The value of securities in safekeeping, which had fallen in 2005, began to increase again. The performance of returns on financial assets prompted savers to focus on temporary cash investments, such as repos and government securities. The growth in the value of cash deposited in current accounts slowed.
