472 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 31 August and 29 September 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 (2.5 per cent). The expected inflation rate for the following 12 months was 0.1 percentage point lower than the actual rate for the most recent month for which a comparison can be made (June 2006).
General economic situation
According to 56.4 per cent of companies, the general economic situation in Italy is unchanged compared with three months earlier. There was an increase vis-à-vis June in the proportion of companies which saw an improvement (38 per cent compared with 25.4 per cent), and a fall in the share which considered the situation to have worsened (5.6 per cent compared with 14.8 per cent). The share of positive opinions was above average among companies with more than 1000 employees (57.6 per cent) and among those in the North-East (42.6 per cent), while negative views were more widespread among smaller companies (7.7 per cent) and those in industry (7.1 per cent).
15.8 per cent of companies put the likelihood of an improvement in the general economic situation in the next three months at zero, while 33.5 per cent believe that the likelihood is greater than a quarter (compared with 27.9 and 25.1 per cent respectively in March). As in the past, the most optimistic signs come from the North 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 68.6 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 (23.2 per cent) is greater than the share of those who expect the situation to worsen (8.3 per cent). The differential between the two options has increased by comparison with the last survey (14.9 percentage points compared with 9.6 in June). 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, and price effects will be positive.
Expectations with regard to the business situation in the following three years remain positive, as in June: 58.5 per cent of companies expect an improvement (compared with 57.3 per cent in June), while 15.6 per cent expect conditions to worsen (compared with 17.2 per cent). Positive responses were more common in the South andIslands (66.4 per cent) and for medium-sized companies (61.2 per cent), while negative responses were relatively more common in the North-East (17.5 per cent) and among companies with more than 1000 employees (17.3 per cent).
Investment environment
69.6 per cent of companies judge that the investment environment has remained unchanged vis-à-vis March (compared with 69.5 per cent in the last survey). Positive views outweigh negative views (19.4 per cent compared with 11 per cent), while in June the differential was just 0.9 percentage points. As in the other categories, the strongest signs of improvement come from large companies (positive views in 24.5 per cent of cases), while the largest shares of pessimistic views are found in the North-East and the South (15.8 and 15.1 per cent respectively).
Employment rate
With regard to total employment, three-month forecasts of an increase outweigh those of a reduction (27.8 per cent compared with 18.9 per cent). This was also the case in the previous survey, and the differential seems to be more or less unchanged. Companies in the services sector are more inclined to expect an increase in the number of employed persons (34.1 per cent foresee an increase, while 14.6 per cent expect a decrease), as are those in the North-East (34.9 per cent compared with 16.4 per cent) and large companies (33 per cent compared with 22 per cent), while
the signs are weaker for industrial companies (22.7 per cent compared with 22.3 per cent). Expectations of an improvement seem to be more widespread, as in June, also in the case of permanent employment (with 19.5 per cent of companies expecting a rise, compared with 16.3 per cent who expect a fall). As in the past, fixed-term employment is foreseen to increase, in particular by large companies, in the services sector and in the South.
Changes in Companies' sales prices
On average, companies reported an increase in their sales prices of 2 per cent in the past 12 months, 0.6 percentage points more than they had expected in September 2005. For the next year, they expect a rise of 2.1 percentage points, in line with the responses in June. Companies in the South seem to be experiencing a more sustained rise, while those in the North-East have witnessed a more contained increase. The increases are due principally to tensions in the market for raw materials and changes in demand. Changes in the exchange rate of the euro 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 September 2007 is 0.3 percentage points, a fall vis-à-vis the previous quarter (0.4 percentage points). In the last month for which data are available (June 2006), 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 (compared with 1.5 percentage points in June).
