Italy entered late summer with households more skeptical and companies no more optimistic, a combination that rarely produces strong growth. The latest surveys show consumer confidence slipping to 96.2 from 97.2, missing forecasts and reminding retailers that the post-holiday stretch won’t be easy. Business confidence, meanwhile, stayed at 93.6 overall—neither cracking nor catching a breeze—thanks to firmer readings in services that offset another soft month for factories. The picture that emerges is not of crisis, but of caution: families are counting pennies, and firms are keeping their powder dry.
Start with consumers. After a brief improvement in July, sentiment gave back ground in August, leaving the index below its historical norm. That level lines up with what store managers and lenders have been describing for months: foot traffic is fine on weekends, discount events still work, but shoppers are picky and big purchases take longer to close. With the economy having contracted 0.1% in the second quarter, the onus is on real incomes and job security to rekindle spending into the fall. If gasoline and utility bills stay manageable and wage gains outpace prices even modestly, confidence has room to heal; if not, the instinct to save will keep winning.
Companies are telling a parallel story. Services are coping, helped by tourism’s long tail and steady demand for logistics, healthcare, and business support. Manufacturing is not. The factory sub-index edged down again, echoing weak order books for intermediate goods and energy-sensitive producers. That gap is logical in a Europe where consumers have proved more resilient than industrial buyers, but it also sets a ceiling on momentum: services can carry the load for a while, yet without a clearer turn in industry, capex plans will remain tentative and productivity gains harder to unlock.
All of this lands in the middle of a sensitive budget season. The government is trying to draw a straighter fiscal path without snuffing out growth, a task made harder by higher borrowing costs and still-fragile demand. Investors will watch how the next budget draft balances targeted relief—especially for lower-income households and small businesses—against commitments to keep the debt ratio on a stable trajectory. Auction demand for BTPs provides a running referendum; so far, it has been orderly, helped by a market that expects easier ECB policy over the next year.
Risks cut both ways. A friendlier inflation profile could bolster real wages and ease household anxiety, while any stabilization in Germany’s economy would filter quickly through to Italian suppliers. On the other side of the ledger, a negative shock to employment or a surprise in energy prices would pressure both sides of the confidence ledger. Trade frictions or new tariffs would add another headwind to a manufacturing base already working through a slow global cycle.
For now, prudence rules. Households are spending on what they need and thinking twice about what they want. Firms are holding margins and guarding cash rather than chasing growth at any price. That stance won’t deliver fireworks, but it can keep the economy off the rocks while policymakers try to rebuild room to maneuver. If consumers feel a little richer this autumn and factories see even a faint pickup in orders, August’s downbeat readings could mark a near-term trough. If not, Italy’s story stays the same: steady services, struggling industry, and a recovery that moves in inches.
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