Belgium's Business Confidence Unexpectedly Increases

By Jurjen van de Pol

Aug. 22 (Bloomberg) -- Belgian business confidence unexpectedly increased in August, led by a rebound in sentiment in the manufacturing industry after the cost of oil and other commodities retreated from record levels.

The business-sentiment index rose to minus 5.9 this month from minus 7.6 in July, the Brussels-based National Bank of Belgium said today in an e-mailed statement. Economists expected a drop to minus 8, according to the median of 16 forecasts in a Bloomberg News survey.

Crude-oil prices have fallen 17 percent since reaching an all-time high above $147 a barrel on July 11, easing raw- material costs for companies across the 15 nations that use the euro. At the same time, the euro's retreat from record levels against the dollar is making European goods more competitive abroad.

``The decline in the oil price and decline in the euro -- that made producers more optimistic,'' said Steven Vanneste, an economist at Fortis Bank in Brussels. Still, ``I don't think we are getting in an optimistic trend,'' he said, noting that ``Belgian firms are confronted with a lot of high input costs.''

While the Belgian economy outpaced the contracting euro region in the second quarter, expanding 0.3 percent from the previous three months, it was the nation's slowest growth in more than three years. The jobless rate increased in July for the first time in 15 months, signaling employers' hesitance to hire after the central bank cut its economic-growth forecast.

German Sentiment

Business sentiment in Germany, Europe's largest economy, probably declined further this month after plunging in July by the most since the Sept. 11 terrorist attacks in 2001. The Munich-based Ifo institute's business climate index fell to 97.2 from 97.5 last month, according to the median estimate of 11 economists in a Bloomberg News survey. The index, which is based on a survey of 7,000 executives, will be released Aug. 26.

The Belgian central bank's gauge of confidence in the manufacturing industry increased to minus 5.6 this month from minus 8.1 in July, today's report showed. Construction sentiment rose for a fourth month, with that indicator increasing to 1.3 from minus 0.6 in the previous month.

Belgian consumer confidence improved for the first time in six months in August as households worried less about economic growth and personal finances, the central bank said two days ago.

To contact the reporter on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net