Confindustria: production down, but manufacturing is holding up
L’Italian economy per Confindustria proceeds better than expected. Despite inflation is still very high – 11.6% the latest Istat survey – in the Conjuncture flash the association of industrialists points out that the price of gas at its lowest levels for over a year and the resilience of household purchasing power have supported production activity, as also confirmed by the results of the indexes Bag recovering in the first weeks of 2023. The sharp rise in interest rates operated by central banks in recent months continues to weigh on the economic outlook, which takes resources away from investments and consumption, also affected by inflation, which is declining but still high. As expected by analysts, the end of 2022 was difficult. Production recorded another drop in November: -0.3%; -1.8% in September and -1.1% in October. While manufacturing holds up (+0.1%), with wide heterogeneity between sectors, the energy supply sector contracted instead (-4.5%).
For the 4th quarter, the variation acquired is valued by Confindustria as “very negative” for the total industry (-1.7%, -0.6% in the third). The qualitative data in December signal “a weak scenario”: orders continue to decrease, stocks increase, expectations of a rebound are reduced; the PMI is still in a slight contraction area (48.5 from 48.4), the confidence of businesses “marks a new descent”. The marked cooling of energy prices could help the recovery. Gas opened 2023 in sharp decline: 65 euro/MWh on average in January, from 114 in December (14 in 2019); “a decline favored by still high European gas stocks, a mild climate and slower consumption”. For oil, the report notes, “the slow decline continues (80 dollars a barrel, from 81 in December), thanks to a production that has overcome a flat demand”. On the other hand, non-energy prices increased slightly (+1.6% in November-December), after the decline in the previous months, on the high levels of 2021.
I interest rates continue to be a non-secondary variable. In November, the cost of credit for Italian companies continued to rise: 3.37% for SMEs (1.74% at the beginning of 2022), 2.67% for large companies (from 0.76%). A “further increase in costs, which occurs following the rise in reference rates”. The “ups and downs” dynamics of Italian exports also continues, rebounding in November (+3.8%, after -1.5%), also thanks to maxi-sales in shipbuilding. Non-EU countries are the driving force, while intra-area exports are stationary: “The USA and Turkey are confirmed as the most dynamic markets, sales in China are sluggish, in contraction in Russia; the brakes, also in perspective, the weakening of the German market”. The indications for the beginning of 2023 for exports “remain negative” according to foreign manufacturing orders, against weak world demand, as confirmed by data on trade in a contraction area.
Il focus Of Confindustria focuses on China’s economic prospects, where growth was at its lowest in 2022 but accelerating. It is estimated that the Chinese GDP will go from +3.0% in 2022 (worst figure in the last 40 years, except for 2020) to a value of around +4.5% in 2023, returning to the path of gradual slowdown followed in precedence. There Chinese restart, notes Confindustria, could “wobble at the beginning of the year due to the surge in infections from Covid, but a gradual improvement in domestic demand and industrial production is expected after the slowdown at the end of 2022”. The PMI data for December confirm this trend, with values still in negative territory but improving and with the component of new orders in services marking its highest level since May.
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