Services (Germany):
Worsened business expectations

In the service sector the business climate indicator fell clearly in October. The current business situation was again assessed less positively by the survey participants, but is still good on the whole. However, the service providers anticipate considerably weaker business activity in the next six months; the expectation component of the business climate deteriorated strongly. Turnover was only minimally higher than in the previous month, and the dissatisfaction with order stocks hardly abated. For the next three months the survey participants expect slight declines in demand. The willingness to hire additional staff has continued to decrease noticeably in the service sector. In transportation and logistics the business climate deteriorated clearly. These companies are more dissatisfied with their current business situation and expect weaker business activity in the next six months. The firms increasingly complain about inadequate order stocks and also expect declining demand in the next quarter. In the coming months, they will have difficulties in implementing price hikes. The situation is similar in the advertising industry: the current business situation is judged as less favourable and firms anticipate a slowing in business activity. The dissatisfaction with order stocks increased among the survey participants, and they do not intend to hire additional personnel. A considerable worsening of the business climate also occurred in the area of personnel and job placement - to which temporary employment firms also belong. Although the firms reported a slightly less favourable business situation, the majority expects a decline in business activity in the coming half year. In the areas of transportation and logistics and worker posting, important business-oriented service providers are anticipating a weakening in business activity and have thus the same expectations as manufacturing firms. The business climate for EDP service providers also became cloudier but they are still a positive exception: the firms evaluated their current business situation a little more positively than in the previous month. For the next six months they do not expect any further improvement of the business situation but at least a nearly stable development. For this reason EDP service providers are still recruiting additional employees.