Western German manufacturing: Investment recovery after three-year decline

In 2006 enterprises in western German manufacturing plan to increase their investments in new buildings and equipment by nearly 5% (6% in real terms). For 2005 the survey participants reported an investment increase of 2%; in total the enterprises invested €40 billion. This marked only a partial implementation of original investment plans; in spring an increase of 4% was expected for 2005. Larger enterprises in particular corrected their plans downwards, whereas small and medium-sized firms made considerable investments. The main investment motivation of western German industrial firms is replacement purchases. In second place is capacity expansion; the rationalisation motive continues to lose ground. 1,700 industrial firms representing 51% of western German manufacturing participated in the survey carried out by the Ifo Institute.