Belgian October Business Confidence Drops to Lowest Since 2003

By Jurjen van de Pol

Oct. 23 (Bloomberg) -- Belgian business confidence dropped to the lowest in more than five years in October as the worsening global financial crisis undermined sentiment in the building industry.

The confidence index for Belgium, the sixth-largest economy in the 15-nation euro zone, fell to minus 14.8 from minus 14.4 in September, the Brussels-based National Bank of Belgium said today in an e-mailed statement. The October reading is the lowest since July 2003. In the manufacturing industry, ``forecasts for demand and employment are still on a downward path,'' the central bank said.

The deepening U.S.-led credit crisis, which has caused $660 billion of bank writedowns and losses worldwide, is pressuring economies across Europe and forcing governments to rescue embattled lenders. Growth in the euro region may have stagnated last quarter after the economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, as exports, investment and consumer spending fell.

``The recession scenarios have come out of the closet everywhere in the last month,'' said Bart Van Craeynest, an economist at KBC Bank NV in Brussels. ``Confidence is still above the levels of the 2001 recession and I expect they will drop below that in this cycle.''

DAF Trucks will cut 750 jobs in Belgium as the credit crisis forces the Paccar Inc. unit to lower production, the Belga newswire reported yesterday. Agfa-Gevaert NV, Europe's largest maker of health-care imaging systems, said Oct. 14 it plans to reduce its Belgian workforce by 300 positions.

Building Industry

A gauge of sentiment in Belgium's building industry fell to minus 5.9 from minus 3.6 in September as companies became more pessimistic about their order books and the labor-market outlook, according to today's report. Confidence in trade fell to minus 23 from minus 18.7.

Economists had expected the overall confidence index to decline to minus 16, according to the median of 18 forecasts in a Bloomberg News survey.

Business sentiment in Germany, which has declined for the past four months, is scheduled to be released on Oct. 27 by the Munich-based IFO Institute.

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