Consumption continues to drive Italy’s economic growth

Italy's production and sentiment surveys have been above the long-term averages since summer 2015. The nation's PMI had initially dropped in other business surveys, but it has risen up. Moreover, Industrial production in the country is widely lining up with these signals. According to the surveys, auto production will rebound, which will be beneficial for a pick-up in capex.

"Given the collapse in investment seen since the start of the global financial crisis-business capex is down 25% from the pre-recession peak and construction investment almost 40%- there is scope for a long durables replacement cycle", says JP Morgan.

Meanwhile, the Italian economic growth has mainly been driven by consumption since mid-2015, with the help of a considerable rise in consumer confidence. Also, intentions to make major purchases have increased sharply. The indicators for business investment and consumer spending indicate suggests upward trend.