Euro-Region Consumer Confidence Plunges to Lowest in 2 Years

European consumer confidence tumbled in September to the lowest in two years as a worsening debt crisis sparked concerns that the economy may slide into a recession.

An index of household sentiment in the 17-nation euro area fell to minus 18.9 from minus 16.5 in August, the Brussels-based European Commission said in an initial estimate today. Economists forecast a drop to minus 18, the median of 29 estimates in a Bloomberg News survey showed.

Europe’s manufacturing and services output contracted in September for the first time in more than two years and employment growth slowed, adding to signs that tougher austerity measures are hurting economic growth. The European Central Bank on Sept. 8 kept borrowing costs at 1.5 percent, and Paris-based L’Oreal SA (OR), the world’s largest maker of cosmetics, last month reported first-half earnings that missed analysts’ estimates.

“We see a material and rising risk of outright gross domestic product contraction in the fourth quarter,” Marco Valli, chief euro-region economist at UniCredit Global Research in Milan, wrote in an e-mailed note before the report. Signs of a slowdown “will probably increase pressure on the ECB to cut rates soon.”

The commission is scheduled to publish its monthly report on euro-area economic confidence, which includes the consumer- confidence gauge, on Sept. 29.

To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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