Economic confidence in the euro zone in November declined to its lowest level since August 1993, a survey from the European Commission showed Thursday.
The economic sentiment indicator in the 15-nation bloc sharing the euro fell by 5.1 points to 74.9 in November, following a fall of 7.1 points in the previous month.
In the 27-nation European Union (EU), the monthly indicator, based on business and consumer surveys, also dropped sharply by 6.7 points in November to 70.5, its lowest level since January 1985 when the statistics started.
The surveys are conducted in different sectors of the economy, namely industry, services, construction and retail trade as well as among consumers.
In both the euro zone and the EU, confidence fell considerably across all sectors. The industrial confidence indicator decreased significantly again. The services confidence indicator marked a new record-low level since 1985. Consumer confidence declined only marginally, but remained at very low levels compared to its average value. Sentiment in the retail sector declined further in the EU, but remained the same in the euro zone, while the construction confidence indicator dropped markedly in both regions.
All EU countries reported a fall in their economic confidence. Among the large member states, confidence deteriorated most markedly in Britain, down by 8.8 points, followed by Poland, Germany and the Netherlands, down by 7, 6.3 and 5.4 points respectively.
Meanwhile, the business climate indicator (BCI) for the euro zone decreased further in November to values last observed in 1993,the Commission said in a separate survey.
"The continued steep decline of the indicator signals a deteriorating trend in year-on-year industrial production growth, which is likely to continue to be negative even in the fourth quarter," the Commission said.
All five underlying components of the BCI declined. Managers reported a sharp fall in the production trend while stocks of finished goods increased. Their assessment of the current overall order book and export order book is increasingly negative. Looking ahead, production expectations in the euro area worsened notably compared to last month.
Worsening confidence strengthened widespread fear of a deep recession in Europe. According to forecasts by the European Commission, the euro zone plunged into recession in the third quarter and the EU is set to follow in the fourth quarter.
EU Commissioner for Economic and Monetary Affairs Joaquin Almunia warned Thursday that both the EU and the euro zone will see contraction next year due to the financial crisis.
Previous Commission forecasts said the EU will grow by 0.2 percent next year and the euro zone by 0.1 percent.
In a bid to prevent the financial crisis evolving into an economic crisis, the Commission unveiled on Wednesday a massive package worth 200 billion euros (US$260 billion) to stimulate the economy.
(Xinhua News Agency November 28, 2008)
