Consumer confidence deteriorated in July as the impact of the economic slowdown continued to affect people's plans. The State Secretariat for Economic Affairs (SECO) said its regular survey of 1,100 households showed its index fell to 12 points from 21 points in April.

The fall was sharper than economists had expected and is a further sign that Switzerland's economic situation is worsening. Although the country is still far from entering a recession, growth is quickly falling from last year's robust 3.4 per cent.

The consumer confidence index has been in retreat since January 2001 when the reading was plus 25. Job security was rated minus one following announcements of lay-offs by several companies, including ABB, Silicon Graphics, Roche and Nortel Networks.

Analysts say the economy is now clearly feeling the effects of the downturn in the United States, and its spread to Switzerland's biggest trading partner, the European Union. On Wednesday, the country's unemployment rate registered its first rise since January.

The markets see the raft of bearish economic data as a sign that the Swiss National Bank could cut its interest rates for the second time this year when it issues its fourth-quarter monetary policy statement next month.

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