Surprise: Istat says GDP and employment are performing better than expected

Istat data on GDP and the labour market appear to suggest that everything is stable. The economic accounts confirm the preliminary estimates: in the second quarter, GDP rose by 0.2 per cent compared with the previous quarter and by 1 per cent year-on-year, with a year-to-date increase of 0.8 per cent in 2026. As for the labour market, in July the number of people in employment remained stable compared with June, with a slight fall in the number of unemployed and economically inactive people. But in reality, beneath the surface of this stability, the figures point to a positive trend compared with forecasts – both in terms of growth and employment.

It is true that in July the number of people in employment remained virtually unchanged compared with June (+3,000), but Istat has revised the previous data series, increasing the number of people in employment by 60,000: this means that, according to figures from a month ago, there were 24,310,000 people in employment in June, whilst there are now 24,370,000, with the employment rate revised upwards from 62.9 per cent to 63.2 per cent (an all-time high).

This means that since the start of the year there have been around 230,000 more people in employment – an increase of 307,000 over the past year – and all on permanent contracts (the number of people on fixed-term contracts has fallen by 82,000).

As regards GDP, all the forecasts were more pessimistic: +0.5 per cent from the European Commission; +0.5 per cent from the IMF; +0.6 per cent from the Ministry of Economy and Finance (MEF) in its April report. The estimates, made in the first half of the year, assumed a more severe impact from the energy shock caused by the war in the Persian Gulf. Instead, the economy has performed better than expected. According to Istat’s now finalised data, the actual change in GDP for the first half of the year stands at 0.8 per cent. This is already above the forecasts for the whole year. However, this figure has been adjusted to account for calendar effects.

If we consider that 2026 has three more working days than last year – equivalent to approximately 0.15 percentage points of additional GDP – then this amounts to almost 1 per cent annual growth, assuming GDP remains stagnant in the second half of the year (neither growth nor recession). Many analysts are revising their forecasts; for example, Oxford Economics has raised its GDP estimate for 2026 to +0.9 per cent (to which three extra working days must be added, bringing the figure to around 1 per cent).

The surprising figure, at least compared with fears at the start of the year, is that growth is being driven by consumption and, in particular, by household spending, which rose by 0.4 per cent quarter-on-quarter and 1.3 per cent year-on-year. In short, households have, on the whole, weathered the energy shock, which has mainly affected oil and fuel. For the rest of the year, the main concerns may centre on gas, which has risen above 70 euros per MWh (compared with 30 euros last year), in a context where European gas reserves are below normal levels and Italy is highly exposed to methane price fluctuations.

In short, it is unclear how the economy will fare in the second half of the year, but in the first half it performed better than expected: GDP and employment are growing more than forecast. The oil shock has been handled well; now we must tackle the gas shock.