GDP, Confinustria: Italian economy growing but at different speeds. Record tourism, bad industry
The Italian economy is growing but at different speeds. In the first quarter of 2024, Italian GDP grew by 0.3%, even if industrial production and consumption of goods contracted. Tourism (at record levels), services (moderate growth) and net exports were positive. Problems in the global transport of goods, energy still expensive and interest rates at their highest are having a negative effect. Family and business confidence is declining. This is what emerges from the May flash situation of the Confindustria Study Center (CSC).
Work: Csc, increases further but the authorized hours of redundancy fund also increase
In the first quarter the number of employed continued to grow (+0.2%), the result of +133 thousand permanent employees (+0.8%), -72 thousand temporary employees (-2.5%) and almost stable self-employed workers. However, the increase in authorized CIG hours (+8.6% on 1st 2023) signals some slowdown in the use of labor input. Contractual wages in the private sector accelerate: +4.7% in industry in 1st 2024 (+3.2% in 2023), +2.3% in services (from +1.3%), compared to +0 .9% inflation. This is what emerges from the May flash situation of the Confindustria Study Center.
Csc: Eurozone on the rise, US slowing down but growth in China is good
In the 1st quarter, euro area GDP returned to growth (+0.3%), after two quarters of slight decline. The news is the partial recovery in Germany (+0.2% after -0.5%); the other main countries continue to grow. The expansion achieved in 2024, however, is just +0.3%. In March, German industrial production fell (-0.7%), but recorded +0.3% in the 1st quarter. In April, confidence worsened (ESI below the 2023 average) and expectations on the labor market (EEI to 101.8 from 102.5). This is what the Confindustria Study Center (CSC) underlines in the flash economic situation of May.
GDP in the United States in the 1st quarter, however, observes the CSC, slowed down (+0.4% from +0.8%), with the positive contribution of consumption (+0.4%) and investments, negative by inventories and net exports (-0.2%). The growth achieved in 2024 is already +1.8%. Industrial production in the 1st year fell by -0.5%, as in the 4th year of 2023, but the decline was in December-January: in the following two months, a rebound (+0.4% per month). In April, jobs created were decreasing (175 thousand, from an average of 269 thousand in the 1st), as was the growth in nominal wages (+0.2%, from +0.3%).
China, for its part, notes the CSC, closed the 1st quarter above expectations (GDP +5.3% year-on-year), driven by manufacturing (+6.1%), especially the high-tech sectors: +40 % in 3D printers, electric car charging stations, other electronic components. The start of the second quarter was good, with manufacturing accelerating in April (PMI at 51.4). In the coming months, an unfavorable base effect on GDP and uncertainty on exports due to the new US restrictions will weigh heavily: public support could be decisive for the 5.0% growth objective.
Csc: due to high but moderating oil prices, EU inflation keeps ECB rates high
The price of oil, after reaching a peak in April, reversed course in May (83 dollars a barrel, from 90), but at a still high level: OECD crude oil inventories have partially recovered, despite the supply in OPEC countries it remains limited, a sign of weakness in global oil demand. This is what emerges from the May flash economic situation of the Confindustria Study Center (Csc). The price of gas, however, continues its slow rise (30 euros/mWh in May, from 26 in February), at values more than double those of 2019.
EU inflation keeps rates high. In Italy, inflation remained low in April (+0.8%): the decline in energy prices eased (-12.1% per year, from -24.7% at the end of 2023), while core prices slowed down ( +2.1%). But in the Eurozone the decline stopped (+2.4%), with the core high (+2.7%) compared to the threshold of +2.0%. US inflation surprised on the upside in March (+3.5%). Therefore, in April-May, the CSC notes, the FEF and the ECB kept rates steady (5.50% and 4.50%): the markets expect a first cut in Europe in June-July.
Trade: Csc, longer routes and higher costs in the transport of goods by sea
Maritime transport under pressure. Geopolitical and climatic factors undermine the safety and reliability of global merchant shipping: Houthi attacks in the Red Sea, piracy in the Strait of Malacca, drought in the Panama Canal, tensions in the Taiwan Strait. Crucial hubs of global trade in goods are affected: approximately 80% in volume and 50% in value take place by sea. This is what the Confindustria Study Center (CSC) found in the May flash economic situation. The major global carriers, it is noted, have reacted by modifying routes, reorganizing their fleets and increasing the speed of their ships. And increasing the cost of shipping (the so-called freight).
From the beginning of December 2023 to the beginning of May 2024, transits in the Red Sea fell by 61.5%, while those around Africa grew by 91.5%. Since the end of February, passages through Malacca (one of the most important global hubs) have dropped by 37.9%. The result is that total transits in the main maritime chokepoints have significantly reduced (the CSC indicator is -22.6%). As a result, observes the Confindustria Study Center, shipping costs between Asia and Europe have jumped and, to a lesser extent, those between Asia and America. In particular: Shanghai-Genoa freight rates increased by 3 and a half times at the end of January, and then only partially decreased (still +207.4% at the beginning of May); equivalent dynamics for Shanghai-Rotterdam (+216.7%). Freight rates between China and the United States reacted with a slight lag, reaching a peak in February and recording increases of around 100% in early May. Furthermore, the route between Shanghai and New York remains expensive even for operation via the Panama Canal service. Overall, global shipping costs stood at levels 128.6% higher at the beginning of May compared to five months earlier. In the medium term, an increase in the maritime fleet could ensure the necessary capacity for permanently longer routes. But the variable costs of shipping (hours worked, fuel consumption) would remain higher (for Italy +50% with Japan, +70% with China, +170% with India, in terms of distance).
The increase in freight rates, the CSC notes, impacts the price of imported goods and the competitiveness of Italian products, both directly and indirectly, i.e. through the cost and availability of raw materials and semi-finished products purchased abroad. In the 1st quarter of 2024, around a third of manufacturing companies suffered delays in the supply of inputs or increased transport costs (survey on inflation and growth expectations by the Bank of Italy). This also weighs on foreign accounts, because Italian industry often delegates the management of the logistics chain to its foreign counterpart.
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