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Business Confidence index falls sharply during 3Q

47% of ceos have scaled back capital spending

As U.S. business conditions continue to erode, The Conference Board said its Business Confidence Index fell sharply during the third quarter, to a reading of 48, down four points from 52 during the second quarter.

"A deterioration in business confidence was under way in the third quarter," said Lynn Franco, director of the business think tank's Consumer Research Center. "And while the survey was conducted prior to the Sept. 11 terrorist attacks, there is little reason to believe we will see a boost in confidence in the fourth quarter."

In a canvass of more than 125 chief executives from a broad cross-section of American industry, fewer than 8 percent think economic conditions are better than they were six months ago, down sharply from the 19 percent recorded in the second quarter. More than 70 percent said conditions have worsened, up from 64 percent during the previous three months.

Ceos were also more pessimistic about the outlook for the economy over the next six months. More than 20 percent now expect conditions to worsen, up from nearly 15 percent in the second quarter.

Given the gloomy outlook, only 8 percent of ceos reported an increase in capital spending plans since January. And nearly 47 percent have scaled back spending plans, a significant shift from the second-quarter survey, when 20 percent said they had increased their spending plans, while only 14 percent made cuts. Most cited expected sales declines for the spending cuts.

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