Business mood in Italy falls to lowest in 2 years

ROME - Italian business confidence fell to its lowest point in two years in December as the economy probably entered its fourth recession in the last decade amid a wave of austerity measures designed to fight the sovereign debt crisis.

The manufacturing-sentiment index dropped to 92.5, the lowest since December 2009, from a revised 94 in November, the Rome-based national statistics institute Istat said on Thursday. Economists had predicted a reading of 93.7, according to a Bloomberg News survey. Istat originally reported a confidence reading of 94.4 in November.

The mood among executives mirrors consumers' pessimism as Italian Prime Minister Mario Monti implements a 30-billion-euro ($39 billion) package of spending cuts and tax increases. Italian consumer confidence fell in December to the lowest in 16 years and the economy shrank in the third quarter. The government forecast a further contraction in the current three-month period, meaning Italy is in its fourth recession since 2001.