ROME, Sept 25 - Italian business confidence eased from year highs in September thanks to limp domestic orders, but stock movements in warehouses offered optimism for the future, research body ISAE said on Thursday. ISAE's business confidence index, based on a survey of 4,000 firms, slid to a seasonally adjusted 94.5 in September from a revised 95.1 in August. August was previously reported as 95.3. The index came in slightly above analysts' expectations of 94.2 so despite the dip, the feeling was that company sentiment is on the mend. "It suggests that the worst is over and Italy is finally emerging from the first-half recession. An uptrend in the following months, in the backdrop of a global economic improvement should vindicate this," said Kleopatra Nikolaou, an analyst at 4Cast in London.
Order levels helped pull confidence fractionally lower, with that index falling to -18 in September from -17 the month before, but ISAE painted different pictures for home and foreign markets. "In terms of demand, there are positive indications coming from overseas markets, while internal ones suffered a slight dip from last month," the government-funded thinktank said in its commentary. Likewise prospects for industrial production, which has been languishing in the doldrums for much of the year, looked fragile, with that index nudging lower to 17 from 18 in August. On Tuesday the influential employers' group Confindustria predicted output would fall more than one percent in September. Italy is battling to haul itself out of recession, after the economy, like Germany and the Netherlands, contracted for two consecutive quarters at the start of the year.
And ISAE said the fact that companies continued to run down warehouse stocks might be a pointer to better times. The stocks component fell to -7 from -6 in August -- below levels considered normal for the second month in a row. "In the past, repeated phases of destocking are usually accompanied by a pick-up in confidence," ISAE said. But while businesses in the euro zone's third-largest economy seem perkier, consumers still have the blues. ISAE's shopper survey on Tuesday showed consumer confidence barely off historic lows and despite an overall marginal rise, respondents to its survey were generally pessimistic, worried about the labour market and inflation.//