Manufacturing (Germany):
More confident business expectations

The firms in manufacturing judged their current situation at the beginning of 2008 as positively as before. Current demand matched that of the previous month, and production was expanded. In spite of this, order stocks also increased somewhat, surpassing normal levels. Inventory pressure made itself felt a little more strongly, however. Capacity utilisation increased again slightly, corresponding to the previous-year value at 87.5%. Order backlogs increased to 3.1 production months, the highest value since the introduction of this question at the federal level in 1992. The firms look to future business developments a little more confidently. This, however, was only the case in the consumer goods field; in capital goods optimism weakened again and in intermediate goods a slight scepticism was registered. The firms expressed nearly as much optimism with regard to future export business. In their opinion competitiveness has improved again in recent months in domestic and in foreign markets - particularly within EU. Production plans point to further increases. However, the firms still complained about restraints to production activity because of the shortage of specialists. The share of firms that plan to hire additional personnel in the coming months decreased somewhat. In eastern Germany the positive assessments of the current situation judgments dominated a little less clearly than in the previous month. Also the confidence in the business outlook decreased somewhat - unlike the federal average. Fourth quarter capacity utilisation at 85.6% was just as high as in the third quarter, but the range of order reserves (2.6 months) declined.