- Raj Badiani, an economist at IHS Global Insight
Confidence among Italian manufacturers rose more than was initially predicted this month, as recession eased in the third quarter and the nation's borrowing costs declined. According to the national statistics institute Istat, the manufacturing-sentiment index jumped to 88.9 in December, up from 88.5 in the previous month. The reading came above analysts' expectations of an increase to 88.8. However, sentiment in building, services and retailing weakened to 71.9 from previous month's 73.4, while a measure for retailers and overall economic sentiment dropped to 77.8 and 75.4, respectively. Italian economy shrank by 0.2% in the third quarter of 2012, compared to a 0.6% contraction in the previous quarter. Today's figures sent mixed signals and are adding to concerns that the outlook for the economy remains uncertain.
"Confidence is well short of the level required to herald an economic recovery in the first half of 2013," said Raj Badiani, an economist at IHS Global Insight in London. While the improvement in the index indicates the economy is "entering a less punishing phase," it offers "no hope of an emerging recovery phase."
"We expect the Italian economy will contract in 2012 and 2013...," said the New York-based Standard & Poor's (S&P) ratings agency in a statement released earlier this month.
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