Morale dips at Italian manufacturers, jumps among consumers, other sectors in January

ROME: Italian manufacturing confidence fell slightly in January while broader business morale improved, showing a mixed picture for companies' faith in the economy's chances of bouncing back from recession, data showed on Thursday.

National statistics bureau ISTAT's manufacturing confidence index fell to 97.1 in January, from 97.3 in December, which was marginally revised down from an originally reported 97.5.

A Reuters survey of 11 analysts had pointed to a reading of 98.0 in January. Forecasts ranged from 97.1 to 98.5.

ISTAT's composite business confidence index, which combines surveys of the manufacturing, retail, construction and services sectors, rose to 91.6 in January from 87.6 in December.

ISTAT's consumer confidence index, released at the same time as the business surveys for the first time on Thursday, rose to 104.0 in January from an upwardly-revised 99.9 in December.

The result was firmly above the median forecast of 100.0 drawn from a Reuters survey of 11 analysts. Forecasts spanned 99.0 to 100.3.

The first uptick in consumer confidence after three months of declines suggested Prime Minister Matteo Renzi's tax cuts for lower earners are starting to coax shoppers' wallets out of their pockets.

ISTAT said the fall in the manufacturing index was due to a lower production outlook while order levels remained stable and and inventories rose.

Italian manufacturing activity shrank for the first time in three months in December, a survey of purchasing managers showed, indicating consumers were still tightening their belts in response to the country's third recession in six years.

ISTAT's consumer confidence survey showed the sub-index measuring sentiment on the economy rose to -104 from -108.

The index on the future outlook, incorporating both the economic situation and personal finances, rose to -5 from -15.

Italy, the euro zone's third-largest economy, is struggling with its third recession in six years and has not grown for three of those years, dragged down largely by poor consumer demand.

Analysts say ISTAT's consumer confidence index shows little immediate correlation with spending patterns, but it does reflect longer term trends.

Italy's economy, the third largest in the euro zone, has lost 15 percent of its manufacturing capacity in the last six years of stagnation and recession.