Confidence improved last month among both firms and consumers, who are more upbeat about prospects for the economy and the labour market, ISTAT said in its monthly economic bulletin.

Its composite leading indicator "has interrupted the downward trend (that was) in place since the end of last year, pointing to a scenario of a slight improvement in production levels," the statistics bureau said.

The euro zone's third largest economy has been broadly stagnant for the last five quarters. Gross domestic product was flat in the second quarter on both a quarter-on-quarter and a year-on-year basis, data showed last week.