ECONOMIC OUTLOOK: ECONOMIC SITUATION DECLINES FURTHER IN OCTOBER.

Summary: The indicator for the economic situation in the European Community continued its downward trend in October, according to the latest survey published by the European Commission on December 11. The decline is largely due to a fall in industrial confidence. However, consumers and businesses remain confident despite the worsening economic climate. Compared with September (103.7), the economic sentiment indicator fell back to 103 in October. The decline was less marked in the Euro zone, with the indicator falling from 104.2 in September to 103.7 in October.

The industrial confidence indicator has fallen for the third consecutive month. Managers in industry in all the Member States were less optimistic in October than in recent months. The industrial confidence indicator for the entire Community fell below its long-term average in October, but in the Euro zone remained above the average for the last ten years. Production expectations have been revised down in all the Member States except in Luxembourg and Austria where an increase was noted. Assessments of order books and export order books also fell and are now back to the levels observed in mid-1997. The assessment of new orders in manufacturing industry fell sharply again in October and is now below the long-term average for the EU. The balance for the Euro zone is still above its long-term mean. The rate of capacity utilisation in manufacturing industry fell in October to the levels recorded a year ago. An assessment of the main sectors in...