Manufacturing (Germany):
Stable business climate

The current business situation in German manufacturing was judged, as in the previous month, somewhat positively. Demand increased again and production was expanded. Order stocks remained unchanged in the course of the fourth quarter of 2004, and at 2.7 production months they were just as large as one year ago. Capacity utilisation improved (83.6%); the comparable previous year value was surpassed by a good half a percentage point. With regard to the outlook for the coming half year, the enterprises still expressed confidence, with the positive responses also gaining ground among the produces of consumer goods. Expectations for future export business weakened somewhat, however. For the coming months, the production plans are still expansive. Higher prices are again expected, particularly by producers of intermediate goods, but these expectations are not as prevalent as in previous months. In spite of the general upturn, staff reductions in manufacturing are not yet concluded, although the number of such responses has declined slightly. In eastern German manufacturing the current business situation was classified a little less positively than in the previous month. On the other hand, in the business expectations the optimistic voices gained a slight balance for the first time in five months. Confidence also increased with regard to export opportunities. Production plans were expanded, particularly for intermediate products. In the course of the fourth quarter of 2004, capacity utilisation decreased insignificantly to 82.1%, and the range of the order backlogs fell to 2.3 months. Both values correspond to the state of the previous year. The enterprises in eastern Germany also expect a further decline in employment.