Confidence in Italy Soars

The economic climate in Europe seems to be improving of late, especially in Italy. Confidence in business increased to an 11-month high this month, while the confidence index, put out by the Isae Institute in Rome, has increased to 89.5 — up 0.2 since last month.

 “This report, together with other information, supports the view that the climate in Europe is taking a turn for the better,” Susana Garcia-Cervero, senior economist at Deutsche Bank AG in London, said. “The trend is being reinforced.”

 European government bonds are declining amid talk of increasing interest rates, while the European Central Bank fears that the 43% hike in oil process might affect the economy further.

 “Oil is a tricky one; over the past few weeks it’s fallen a bit and it’s hard to maintain that it’ll still have such a negative effect,” Raj Gunaratna, an economist at 4Cast Ltd in London, said.

 Italian businesses are very optimistic, however, while manufacturing is picking up, as are the expectations surrounding production. Even consumer confidence is on the rise.

 “The rebound in confidence continues to spread through most sectors,” Isae said. “The improvement is particularly marked in the mechanical and transportation industries, as well as that of various manufacturers.”

 Even Fiat is reporting profits and is expected to announce strong full-year numbers.

 But others are discussing whether rates will increase or not in the next little while.

 “The time isn’t yet ripe to raise rates at the next session, but that time is definitely getting nearer,” Pablo Pizzoli, senior economist at ING Bank NV in Milan, said.

 Despite the high oil prices, things are looking good for a solid third and fourth quarter in Italy.

 “It’s still not a given that there’s a sustainable recovery under way in Italy, but there are comforting signs,” Pizolli added.

 Confidence is also on the rise in Germany and France, and pundits are expecting that the European Central Bank will raise benchmark interest rates by the first quarter of next year at the very latest.

 Let’s just hope that the European Central Bank doesn’t make its move before it’s proven that the confidence we’re now seeing from European countries isn’t false — or Europe could soon be feeling the same kind of debt pressure that America is today.