EU: Economic confidence drops to 15-year low

[October 30, 2008]  BRUSSELS, Belgium (AP) -- Business and consumer confidence in the 15 nations that share the euro fell to a 15-year low in October, the European Commission said Thursday, as a credit crunch hits consumer spending and forces companies to shed jobs.

The survey said that shoppers are far more worried about the economy -- meaning they are even less likely to spend heavily in coming months as they fear losing their jobs. Consumer confidence hit its lowest level since 1993.

Industry and construction also dropped but still remain above their worst-ever level recorded during the early 1990s downturn.

The EU's economic sentiment indicator for the euro area dropped to 80.4 in October from 87.5 a month earlier. It measures confidence among consumers and among several business sectors: industry, services, retail and construction

The EU survey said the Dutch became far more pessimistic about the economy in the months ahead, while France, Italy and Germany were also more gloomy as were non-euro states Britain and Poland.

Consumers across the 27-nation European Union expect unemployment to increase, the EU executive said. Industry and services managers also expect to employ fewer people while industry and construction companies said they saw sales prices falling.

Consumers see prices falling over the next year -- as inflation creeps back from record highs over the summer, it said.

A separate EU survey of industry managers also dropped significantly in October to minus 1.34 from minus 0.82 in September. This is the lowest level since 2001.

The European Commission said this suggests that industrial activity remains subdued.

It said the managers were far more pessimistic about future output, total orders and export orders.

[Associated Press]

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