The branches of the Bank of Italy conducted the telephone interviews for the 15th sample survey from 20 September to 10 October this year. The sample consists of 4,196 firms with 20 and over employees, of which 3,058 industrial firms excluding construction and 1,138 non-financial private service firms.
The majority of firms (64 per cent) estimate that nominal expenditure on fixed investment in 2007 will be in line with the figure originally planned, which the surveys conducted in the spring put at 2.5 per cent higher in real terms than in the previous year (5.4 per cent at current prices). The firms that expect to invest more than planned slightly outnumber those that estimate a smaller volume of investment, both in industry and in the service sector.
As to the projections for 2008, again a slightly larger percentage of firms expect to step up their investment (27 per cent, against 19 per cent that forecast a decrease). Projections tend to become more positive as the size of the firm increases and among exporting firms.
Some 56 per cent of firms will finance investment in 2008 mainly from cash flow, compared with 53 per cent in 2006, and about 28 per cent will rely principally on additional borrowing. In six months' time, 20 per cent of firms expect to increase their exposure to banks (19 per cent in 2006) while 25 per cent forecast a decrease. Around 47 per cent of the firms interviewed report that borrowing conditions have tightened in the last two months, in almost all cases in the form of higher interest rates.
Demand and output
Around 50 per cent of firms report larger turnover in nominal terms in the first nine months of 2007, compared with 18 per cent that indicate a decrease. The most favourable signals come from exporting firms and from medium-sized and large firms. As to the various branches of activity, the incidence of reports of an increase in turnover was above average in chemicals and engineering and below average in textiles and clothing.
Some indications of a slight slowdown in demand apparently emerged during the summer, with almost half the sample of firms declaring that orders were stationary at the levels recorded in June, although 36 per cent reported an increase. Four-fifths of firms expect either a standstill or a rise in the remaining months of the year. An analysis of export turnover alone produces similar findings, with firms that export more than a third of turnover recording the best results.
Some 42 per cent of firms project that industrial production will increase in the last quarter of 2007 compared with the third, against 46 per cent in the 2006 survey, and 46 per cent expect it to remain stationary. Firms with more than 200 employees and those with over two-thirds of turnover from exports predict more favourable results, while on a sectoral level textile firms are more pessimistic than the rest of manufacturing. There continues to be a close correlation between short-term expectations regarding the performance of demand and those for production: approximately 75 per cent of firms that plan to increase production in the current quarter expect a rise in orders in the following months.
Employment and wage agreements
The average number of employees is expected to increase in 2007 compared with the previous year, particularly in the service sector and in large firms. Wage rises in excess of those agreed in the national labour contracts have been granted to just under 50 per cent of employees in both industry and services, in line with the findings of earlier surveys. These additional pay rises, which are more frequent as company size increases, only exceed 2 per cent for less than a quarter of the employees concerned.
As in the previous surveys, the majority of firms (72 per cent) expect to close the year with an after-tax profit, while only a tenth predict a loss. Satisfactory results are recorded most often in industry, especially by large firms.
Opinion of the economic situation
One-third of firms believe that their market has grown in the last six months, against 12 per cent that report a recession. Of the 54 per cent of firms that have not noted any change of significance, just under a fifth predict an expansion in the next six months; this compares with three-quarters of firms that describe the present phase as expansionary. Overall, current assessments and expectations are better in industry than in the service sector and are especially strong in chemicals and engineering and among large firms.