Business confidence among European firms in Vietnam fell for a third consecutive quarter, with a drop of seven points to 63, according to the latest survey by EuroCham in Vietnam released on Tuesday.

Eurocham's quarterly Business Climate Index (BCI) survey was made in early July among its 177 members, with about half doing business in the services industry, a quarter in manufacturing, and the rest in trading or other activities.

BCI showed the respondents' cautiousness in their business outlook for the third quarter and somber in assessing their current situation.

Compared to the previous survey, there was a 10 percent drop, or 46 percent of respondents assessing their current business situation as "good" or "excellent", against 56 percent in the second quarter and 64 percent in the first quarter of 2011.

The number of businesses having a negative view of their current situation rose slightly from 12 to 16 percent.

When asked about their investment plans for 2011, 32 percent said they want to maintain their level of investment while 31 percent are looking to increase their investment in Vietnam; 54 percent expect an increase in revenue in the medium term, compared with 43 percent in the last quarter.

Relating to recruitment plans, 51 percent said they expect to hire more staff in the medium term, 34 percent want to maintain it at the same level, and 9 percent to reduce their staff in Vietnam.

Predictably, 56 percent of companies expect inflation to have a significant impact on their business and 37 percent to be impacted in some way, while 6 percent said inflation was actually threatening their business.

Vietnam's inflation in July is expected to hit 22.16 percent, according to the Vietnam General Statistics Office.

xinhuanet