Italian Business and Consumer Confidence Improve in August, But Growth Still Subdued

What ISTAT's August Confidence Data Shows

Italian consumer and business confidence both improved in August, according to data published Friday by national statistics institute ISTAT. The consumer confidence index edged up to 94.5 from 94.2 in July, its second consecutive monthly gain, while the composite business sentiment index rose for a third straight month to 96.9 from 95.7.

The rise in business morale was spread across the industry, retail, construction and services surveys. Manufacturing sentiment, however, was the weakest part of the release: the sub-index climbed only marginally to 89.9 from 89.7 in July, just below the 90.0 median forecast in a Reuters poll. Consumer confidence also missed its 95.0 consensus estimate, suggesting households remain more cautious than analysts had expected.

The August figures arrive against a subdued official backdrop. In April, Prime Minister Giorgia Meloni's government cut its growth forecast to 0.6 percent for both this year and next, from previous targets of 0.7 percent and 0.8 percent, citing higher energy prices and Middle East instability. Yet first- and second-quarter GDP figures were stronger than expected, pointing to some resilience despite those headwinds.

ISTAT's survey data therefore strengthens a mixed picture: sentiment is recovering but remains below levels that would signal robust expansion, while the government still expects growth of just 0.8 percent in 2028 — the sixth consecutive year below 1 percent.

Why Italy's Sentiment Rebound Is Stronger in Business Than Consumers

Why the Business Composite Recovery Matters

The composite index's rise from 95.7 to 96.9 is the clearest positive signal in the release. It combines manufacturers, retailers, construction firms and service providers, so the improvement suggests that the recent resilience seen in first- and second-quarter GDP is being reflected in company order expectations and general business conditions rather than only in official output data.

Consumer Sentiment Is Improving, but Still Below Consensus

Consumer confidence's second consecutive increase is encouraging, but the 94.5 reading is below the 95.0 median forecast from a Reuters survey of seven analysts. There is no evidence in this data that households are turning sharply optimistic. The gap between the actual reading and expectations is a small but useful signal that spending intentions remain fragile.

The Government's Low-Growth Baseline Against Recent GDP Strength

The Meloni government's April downgrade to 0.6 percent growth for 2026 and 2027 reflected concern about energy costs and Middle East disruption. The stronger-than-expected GDP data for the first and second quarters suggests those risks have not yet fully materialised in activity. If the confidence recovery continues into autumn, official forecasts may prove conservative, but the longer-term 0.8 percent projection for 2028 shows officials are not anticipating an acceleration.

What the Data Means for Italian Firms and Policy Planning

What businesses and investors should take from the August release:

• Use the business composite cautiously. The third consecutive rise to 96.9 signals improving corporate mood, but the manufacturing sub-index at 89.9 remains below the 90.0 consensus and points to a flat industrial backdrop rather than an upswing.
• Do not treat consumer confidence as a spending recovery signal. At 94.5, household sentiment missed the Reuters consensus for August despite a second monthly gain, so consumer-facing firms should plan for gradual rather than rapid demand improvement.
• Benchmark against official forecasts. The Meloni government's 0.6 percent growth assumption for 2026 and 2027 was cut in April because of energy prices and Middle East tensions. ISTAT's sentiment data and stronger Q1/Q2 GDP suggest some upside to that baseline, but the 0.8 percent 2028 projection underlines the economy's low-growth constraint.