KOF Economic Barometer: Third Increase in a Row – Sentiment before the Spread of Coronavirus in Italy

The KOF Economic Barometer rose by 0.8 points in February, from 100.1 to 100.9. The normalisation towards the region of its long-term mean, which has been observed since December 2019, has thus been confirmed. This development was primarily driven by an improvement in sentiment in the manufacturing sector. Only the indicators from the financial sector had a slightly negative impact. The other indicator groups considered in the Barometer (demand for exports, construction, hospitality, other services and domestic consumer demand) show a practically unchanged picture compared to the previous month.

The improvement in sentiment expressed in the Barometer in the goods producing sectors (manufacturing and construction) was largely determined by forward-looking indicators; the situation with regard to orders, intermediate products and employment in particular is now viewed more positively. The positive development affected practically all industries, most clearly the electrical industry.

It should be noted, however, that the majority of the responses to the February KOF business tendency surveys, which have the greatest weight in our barometer, were given before the spread of coronavirus infections in northern Italy became known.