by Eric J. Lyman
ROME, July 17 (Xinhua) -- Business confidence in Italy increased to its highest level in more than a year, giving the Italian economy a dose of good news despite weak economic growth, falling industrial production, and high unemployment levels.
The business confidence survey, conducted three times a year by information services company HIS Markit, showed business confidence at its highest level in a year. The survey showed confidence in corporate outlooks, capital expenditures, and employment all improving compared to the previous survey in February.
The survey showed that 29 percent of businesses said they expected conditions to improve going forward compared to just 23 percent in the previous survey. Companies in the services sector were slightly more optimistic than manufacturers, the survey showed.
Analysts told Xinhua the results of the survey are positive news for an economy expected to grow just 0.1 percent this year, based on data from the Bank of Italy.
The country's unemployment rate remains around 10 percent, with a third of young workers unable to find work, among the highest levels in the European Union. Industrial production levels in Italy have now fallen for three consecutive months after starting the year strong.
"Business confidence is considered a leading indicator, a predictor of what may happen in the future," Alessandro Polli, a statistical economics professor at Rome's La Sapienza University, said in an interview. "From that perspective we could look at the latest findings as a possible sign of good things in the coming months."
Polli said that expectations that other economies in Europe will grow is likely to be better news for Italy than for most other countries, since Italy is the second largest exporter in the European Union, behind only Germany.
"Exports have already been seeing some growth for the last two months," he said.
Polli also said that if the government keeps its promise to lower personal and corporate taxes in the future that it would give a boost to companies. Credit conditions are also likely to improve, he said.
According to Ignazio Drudi, an economist at the University of Bologna, several factors are combining to give businesses more confidence in the future. He said lower yields on government bonds is probably being seen as positive news for the economy.
"For international companies in Italy what happens in the United States and China is very important," Drudi told Xinhua.
But Drudi also noted that it would be mistaken to put too much importance on a single positive report on business confidence. "The long term business confidence trend is still negative," he said.
Political uncertainty continues to be a drag on economic growth, according to analysts. The Italian government managed to avoid sanctions from the European Commission for carrying too much debt, but government officials continue to clash with Brussels in an array of areas.
