481 companies with at least 50 employees, chosen at random from the Kompass database, were asked to complete the survey. The interviews were conducted by Questlab S.r.l. between 1 and 30 March 2006.
Summary of results
Consumer price inflation in Italy
Inflation is expected to stand at 2.4 per cent over the next 12 months, a slight decline vis-à-vis the results from the previous quarter. The expected inflation rate for the following 12 months was 0.2 percentage points higher than the actual rate for the most recent month for which a comparison can be made (December 2005). This was lower than the difference between the two rates in September 2005.
General economic situation
According to 60.4 per cent of companies, the general economic situation in Italy is unchanged compared with three months earlier. There was a slight increase vis-à-vis December 2005 in the proportion of companies which saw an improvement (24 per cent compared with 22.4 per cent), and a fall in the share which considered the situation to have worsened (15.6 per cent compared with 16.1 per cent). The share of positive opinions was above average in the North-West (30.1 per cent), while negative views were more widespread in the South (24.8 per cent).
Expectations for the future have also become more optimistic: only 28.4 per cent of companies put the likelihood of an improvement in the general economic situation in the next three months at zero (compared with 33.3 per cent in December). The strongest signs again come from the North-West and from large companies. There is a strong correlation between the views regarding the development of the economy in the previous three months and those regarding the likelihood of an improvement in the following three months.
Business environment
Although 66.9 per cent of companies believe that their business environment will remain unchanged in the next three months, the share of those who expect a positive development (23.7 per cent) is greater than the share of those who expect the situation to worsen (9.5 per cent). The differential between the two options has more than doubled by comparison with the last survey (14.2 percentage points compared with 6.5 in December). There is again a strong correlation between the opinions expressed and the views regarding economic developments in the previous three months. As in the past, companies expect that increases in raw materials prices and labour costs will have a slightly negative impact on their business in the next quarter. The impact of demand, both domestic and foreign, will be positive and of a similar size.
Expectations with regard to the business situation in the following three years remain positive, as in December 2005: 60.6 per cent of companies expect an improvement (compared with 59.9 per cent in December), while 16.8 per cent expect conditions to worsen (compared with 14.4 per cent). Positive responses were more common in the North-West (65.5 per cent) and for the services sector (62.2 per cent), while negative responses were relatively more common in the Centre (21.8 per cent) and the South (20 per cent).
Investment environment
70.8 per cent of companies judge that the investment environment has remained unchanged vis-à-vis December 2005 (compared with 72.6 per cent in the last survey). Negative and positive views are more or less equal (14.6 per cent compared with 14.7 per cent), while negative responses exceeded positive responses by 4.5 percentage points in December. As in the other categories, the strongest signs of improvement come from the North-West and large companies.
Employment rate
With regard to total employment, for the first time since the subject has been included in the current survey (December 2004), three-month forecasts of an increase outweigh those of a reduction (29.8 per cent compared with 21.3 per cent). Companies in the services sector are more inclined to expect an increase in the number of employed persons (37.1 per cent foresee an increase, while 16.3 per cent expect a decrease), as are large companies (33.7 per cent compared with 22.1 per cent). An exception to the general trend is observed in the Centre (27.3 per cent compared with 24.7 per cent). Expectat ions of a decline outweigh those of an increase only in the case of permanent employment (with 20.7 per cent of companies expecting a fall, compared with 17.6 per cent who expect an increase), but the differential between the two values has more than halved since the la st survey (3.1 percentage points as compared with 6.8). Fixed-term employment is foreseen to increase, in particular by large companies, in the services sector and in the regions of the South and Islands.
Changes in Companies' sales prices
On average, companies reported an increase in their sales prices of 0.7 per cent in the past 12 months, which was less than they had expected in March 2005 (1.5 per cent). For the next year, they expect a rise of 1.7 percentage points, in line with the responses in December. Companies in the Centre seem to be experiencing a more sustained rise, but witnessed smaller increases over the
past year. According to the respondents, the increases are due principally to tensions in the market for raw materials and changes in the exchange rate of the euro. Changes in demand and in labour costs are seen to have little or no impact.
There is a general expectation among companies that their prices will increase by less than the general index in the course of the next 12 months. Looking back, companies usually report lower price increases than the general index. The differential with regard to the forecasts for March 2007 is 0.7 percentage points, a slight fall vis-à-vis the previous quarter (0.8 percentage points). In the last month for which data are available (December 2005), the difference between the actual inflation rate in the previous 12 months and the price increases reported over the same time period was 1.0 percentage point (down from 1.1 percentage points in September 2005).
