The Italian markets (both stock and sovereign debt) have been on a good run.
But the underlying economics in Italy have been bad.
Today’s services PMI was a real bummer, with the headline number falling from 46.0 to 44.6
From the report:
After easing in October to the weakest for 14 months, the rate of decline in business activity at Italian service providers quickened in the penultimate month of the year. That was in line with a faster decrease in new work, helping lead to the most marked drop in employment in the sector since June 2009. Input price inflation meanwhile eased to the weakest for a year, with output prices further reduced amid strong competitive pressure. Output across Italy’s service sector decreased at a marked and accelerated rate in November, as highlighted by a drop in the seasonally adjusted Markit/ADACI Business Activity Index – which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago – from October’s reading of 46.0 to 44.6.
Italy also had one of the worst manufacturing PMI misses in Europe.
That number missed expectations, and fell from 45.3 to 45.1.
And in late November, Italian consumer confidence plunged.
In November, the confidence climate index decreased from 86.2 to 84.8. The decrease was notably explained by economic and future climate, that fell from 71.5 to 69.4 and from 78.2 to 75.2. The balance concerning expectations on unemployment increased from 108 to114. Finally, the balance on inflation perceptions referring to the last 12 months decreased from 74 to 69 compared to the previous month. The balance on inflation expectations for next 12 months also decreased from 30 to 28.
Much of Europe is weak, but Italy is really standing out on the downside.