Services (Germany):
Worsened business situation

In the German service sector the business climate indicator fell clearly in December. The surveyed firms have corrected their assessments of the business situation considerably downward and for the first time in three years report only a satisfactory business situation. With regard to business development in the next six months they are a little more sceptical than in November. The firms anticipate falling demand and plan to reduce staff levels somewhat in the coming months. In goods transport the business climate indicator fell strongly. The firms assessed their business situation as considerably worse and are also pessimistic regarding the business outlook. Demand has weakened and sales compared to December 2007 were assessed clearly more negatively. Also for the coming months the survey participants reckon with a decrease in demand and correspondingly plan to reduce personnel. In spite of the coming increases in Autobahn tolls, they plan to reduce prices. Firms in freight transhipment and storage reported a satisfactory business situation and thus revised their previous assessments. In addition they fear a clear weakening of business activity in the next six months. They also plan to reduce employee numbers. Deviations from the tendency towards personnel reductions were evident in business and public-relations consulting as well as among data processing service providers. These enterprises reported a primarily good business situation though not quite as positive as in the summer. Although they expect some weakening in business in the coming six months, they intend to cautiously increase their staff numbers. Especially software houses plan to hire additional personnel.