Business confidence in Italy once again declined this month, yet there was a steep rise in consumer morale following a slump in July.

This is according to the latest report from Italy’s national statistics office, Istat.

The findings showed overall business confidence in the country edged down from 110.7 to 109.4, the second consecutive monthly decline. This is attributed to a fall in industry, construction, manufacturing and market services, offset by increasing retail trade confidence from 108.5 to 113.5.

According to an ING report, within Italy’s manufacturing sector, confidence fell two points between July and August, the lowest reading since February. The drop in confidence was marked for intermediate and investment goods, with orders dwindling and inventories for finished goods increasing.

However, confidence was improved in the country’s service sectors, with the headline index declining by just half a point. The re-opening of the economy following the pandemic continues to make an impact, yet there are warning signs emerging, especially in regard to tourism. Official data for Q3 arrivals to Italy has not as yet been unveiled.

In contrast, consumer confidence rose from a two-year low of 94.8 to 98.3. The increase is predominantly due to an overall improvement in the economic climate from 84.9 to 92.9, according to Istat.

As such, the latest confidence report bolsters ING’s view that during Q3, Italy’s economy will be able to avoid a GDP contraction, albeit temporarily, primarily because of a delayed tourism-fuelled re-opening effect. Nevertheless, as the summer season comes to an end, it’s forecast that services and manufacturing will impact growth, and may result in GDP growth moving into negative territory in Q4 and Q1 next year. ING forecasts average GDP growth of 3.3% in 2022.