ROME (Reuters) - Morale among Italian businesses and consumers rose to multi-year highs in October, data showed on Wednesday, supporting hopes that a gradual economic recovery can gather steam.
Italy emerged from a three-year recession at the start of this year, and Prime Minister Matteo Renzi's government forecasts growth of 0.9 percent in 2015, strengthening to 1.6 percent in 2016.
Recent data has been mixed, with industrial output and orders both declining at the end of the summer. However, the surge in sentiment across the board in October augurs well for activity over the coming months.
A closely watched manufacturing confidence index rose for the second month running to 105.9 from 104.4 in September, national statistics bureau ISTAT reported, beating expectations and posting the highest reading since February 2008.
Bank of Italy Governor Ignazio Visco said after the data was released that separate surveys by the central bank showed growing optimism among companies over prospects for demand, which should encourage a long-awaited pick up in investment.
ISTAT's composite business morale index, combining the manufacturing, retail, construction and services sectors, hit its highest level since October 2007, while consumer confidence jumped even more sharply to its highest since February 2002.
Visco said in a speech in Rome that a rise in employment this year, helped by government incentives, should continue to support consumer spending. Growth in 2015 "could come close to 1 percent", he said, broadly in line with the official forecast.
However, he cautioned that future prospects in Italy and the euro zone as a whole were clouded by a slowdown in China and emerging markets.