The latest (good) data on the Italian economy says that it is time to lower rates

A vital Italian economy. The picture that emerges from the latest data on inflation, growth and employment paints lights and shadows, but overall our economy is managing to navigate the international and geopolitical uncertainties that continue to characterize the international economy.

As regards employment, in January the latest Istat data show a decline in employment compared to December 2023, due to the decrease in fixed-term employees, which fell to 2 million and 953 thousand, and in self-employed workers, minus 5 million and 45 thousand. Going into detail, the number of employed people is equal to 23 million and 738 thousand units. Higher figure than January 2023 of 362 thousand units. However, on a monthly basis, the employment rate drops to 61.8%, the inactivity rate rises to 33.3% while the unemployment rate is stable at 7.2%. Numbers that should not cause alarm. According to Confcommercio, the downsizing is part of a phase of prolonged growth in levels

employment, since January 2022 the increase has been 883 thousand units, which has already

showed occasional stops, which were promptly reversed. For this reason, before raising alarms, it is better to suspend judgment and understand, by analyzing the next data, whether it is the beginning of an unfavorable trend or just a temporary stop. Despite this, two elements should absolutely not be overlooked. The first are the signs of difficulty that emerge from the employment of the self-employed and the second, the presence of NEETs among the youngest. The latter element could indicate critical issues in the meeting between job supply and demand. An aspect that is already widely characterizing our labor market.

On the inflation front, in February this remained stable at 0.8%. The stabilization of the growth rate of consumer prices is mainly due to the easing of tensions on the prices of unprocessed and processed food goods, the effects of which offset the weakening of deflationary pressures coming from the energy goods sector. The data on underlying inflation, net of energy goods and fresh food, is good, slowing from 2.7 to 2.4% compared to the previous month. The decline in shopping cart prices is also confirmed, going from 5.1 to 3.7% on a trend basis, as are those of high-frequency purchase products, to 2.9% from 3.5% in January . Istat therefore certifies that the inflation acquired for 2024 is equal to 0.5% for the general index and 1.1% for the underlying component. Positive data also recorded on the euro area side where inflation recorded an annual increase of 2.6%, compared to 2.8% in January and +8.5% in the same month of 2023.

And finally, growth. The Italian economy grew by 0.9% last year, which is slightly better than what the government estimated (+0.8%). Looking ahead, Palazzo Chigi sees the economy growing by 1.2% this year, even if the estimates of the main forecasters stop below 1%. The decline in public debt was also good, falling more than expected. In 2023 it fell to 137.3% of GDP from 140.5% recorded the year before, compared to 140.2% which was the Treasury target. According to the executive, the debt is destined to remain stable at around 140% until 2026. The data on the deficit is less brilliant, although it has decreased compared to the previous year, it is still above the target estimated by the Treasury. The Minister of Economy, Giancarlo Giorgetti, intervened on this point, reiterating how the super bonus was disastrous for public finances and that “with the difficult closure of that season, public finance from 2024 will undertake – continues the minister – a path of reasonable sustainability”. For this year, Palazzo Chigi sees a deficit of 4.3%, a target which however is at risk of being exceeded due to audits linked to tax incentives on building renovations.