EDP Service Providers: Recovery slows down

According to the results of the 38th Ifo Survey of EDP Service Providers, conducted in July and August 2004, the German software and EDP service providers have moved out of their business-cycle trough but the recovery is only making slow progress. After four consecutive rises, the Ifo Business Climate Index for the Data Processing Sector has now stagnated. In the second quarter of 2004, business just barely maintained a satisfactory level. One quarter of the firms assessed the current situation as favourable, 47% as satisfactory, but 28% still felt their present business situation was bad. While the expectations for future business development remain high, further improvement is not in sight. Demand weakened and, after a slight improvement in the past two quarters, revenues dipped somewhat in comparison to the same period last year. Workforce reductions will gradually bottom out. In general, recovery in the EDP sector will slow down.