Belgian business confidence, a bellwether for the euro zone, slipped in December to its weakest level in almost two years as retail sentiment slumped, the National Bank said on Thursday. The business confidence index, often referred to as the leading indicator, dropped to -1.9 points, its lowest level since January 2006, from 1.4 in November.
A Reuters poll of 18 economists had produced a median forecast of 0.7 points, with a range from -1.0 to 2.0. All three components of the index slipped, although manufacturing sentiment was already negative in November and construction dipped only slightly into the red. Retail/trade confidence slumped to -3.3 from 8.2 points last month.
The National Bank said that the longer-term trend was now clearly downward. The Belgian number comes a day after the closely watched German Ifo business climate index also slipped to its weakest level since January 2006. In Europe's largest economy, retail sentiment too was particularly bleak in the normally busy lead-up to Christmas.
Ivan Van De Cloot, economist at ING, said that worries about high inflation, the global credit crunch and high oil prices were accumulating, with a clear effect on consumers' willingness to spend.