The interviews for the Banca d’Italia – Il Sole 24 Ore quarterly survey on inflation and growth expectations were carried out between 6 and 21 June 2011. A total of 485 companies with 50 or more employees took part, 283 of which operate in industry and 202 in services.
The main findings
Aspettative d’inflazione in Italia e variazione dei prezzi di vendita delle imprese
The expected rates of consumer price inflation show an increase compared with the March survey, with that for the 6-month time horizon rising from 2.2 to 2.8 per cent and those for the 1- and 2-year time horizons from respectively 2.3 and 2.4 per cent to 2.9 per cent. The three projections are higher than the corresponding forecasts by professional analysts, especially for the longer time horizons. In June the twelve-month increase in consumer prices was 3 per cent, 1.3 percentage points higher than expected in the survey twelve months ago.
Businesses reported that they had raised their selling prices by 1.6 per cent from a year earlier, nearly half a percentage point more than the rise observed in the preceding survey. The increase was considerably more than firms had expected for the following twelve months in June 2010 (0.9 per cent). The largest upward movements were among firms with less than 500 workers and those 85located in the North; there was not a significant difference between industrial and service firms.
For the next twelve months firms expect their list prices to accelerate further, reporting an average increase of 2.2 per cent and larger rises in the Centre and the South (2.6 and 2.4 per cent respectively).
Assessments of the general economic situation
In the second quarter of 2011 assessments of the general economic situation were again marked by uncertainty, with an increase from 60 to 62 per cent in the proportion of firms that saw no change. The difference between firms reporting an improvement and those indicating a worsening, which had been virtually nil in the previous survey, turned negative by nearly 14 percentage points. The pessimism was more pronounced among smaller firms and those in the service sector.
Looking ahead, 41.8 per cent of firms reckoned there was no chance of the general economic situation improving in the coming three months, up from 34.5 per cent in the previous survey. The assessments of medium-sized and large firms were slightly more favourable.
Demand
Firms’ assessments of the demand for their products were more cautious than in the first quarter. The balance between responses indicating expansion and those indicating contraction declined from 7.2 percentage points to 3.1 points. Among firms for which exports amounted to more than two thirds of their sales, the share expecting an improvement in demand fell from 43.6 to 28.1 per cent, while the proportion of firms expecting no change rose. In general industrial firms were more optimistic than service firms.
Just under 40 per cent of exporting firms reckoned that foreign demand for their goods had increased, as against 16.4 per cent that reckoned it had decreased, a slight deterioration compared with the previous survey. Only in the South was there a negative balance of 3.1 percentage points between positive and negative assessments. Looking ahead, just under 60 per cent of all firms expected foreign demand for their products to remain unchanged in the next three months, as against 35 per cent that expected an increase. Firms in industry were more optimistic, as were those located in the Centre, where more than 50 per cent expected an improvement.
Assessments of firms' business conditions
Compared with the previous survey, there was a small increase in the percentage of firms that expected their operating conditions to worsen in the next three months, from 15.8 per cent in March to 18.4 per cent, while the proportion expecting an improvement was basically unchanged at
15.7 per cent. The assessments were more pessimistic among service firms and to an even greater extent in the South. Among the factors that firms expected to influence their operating conditions in the next three months, the importance of demand decreased, returning to the level of a year earlier, as did that of commodity prices.
The optimism about the evolution of operating conditions in the next three years was confirmed, although slightly attenuated. The percentage of firms expecting an improvement declined from 64.7 per cent in the previous survey to 60.1 per cent, and from 77.4 to 76.9 per cent for larger firms.
Conditions for investment
Assessments of the conditions for investment remained highly uncertain, with just under 70 per cent of firms reporting no change. Compared with the previous survey, there was a small increase (from 0.7 percentage points to 2.7 points) in the negative balance between responses indicating an improvement and those indicating a deterioration.
Stocks of finished product
At 85.5 per cent the proportion of firms considering their stocks of finished products to be adequate in relation to expected demand was just on e percentage point lower than in the first
quarter.
Conditions of access to credit
Just under 80 per cent of firms reported no change in their conditions of access to credit in the second quarter; although small, the proportion of firms reporting an improvement rose from 2.2 per cent in March to 5.7 per cent. Firms reporting a deterioration were mostly located in the Centre and the South.
Employment
At 66.5 per cent, the proportion of firms expecting no change in employment in the next three months was down by 3 percentage points on March. The responses indicating an increase and those indicating a fall showed a negative balance of 1.5 percentage points after being
equal in March. The balance was positive for service firms and for firms located in the North-West. Firms in the Centre were the most pessimistic.
