Drastic decline in equipment investments - business climate in movables leasing slowly leaves historic lows

In the German leasing industry, the Ifo business climate deteriorated in the last quarter of 2008 dramatically, standing at the turn of the year at a historic low. In particular the assessments of the current business situation plunged, slipping from September to December by more than 50 percentage points to minus 25.3%. In January and February 2009 the business situation assessments tended to move sideways. The business outlook also went into freefall reaching, in November, the lowest point (on balance, 52%) since the beginning of the survey. Since then pessimism has abated from month to month; the brightening business expectations at least shows the first signs of hope. The investment indicator, shows a clear decline in equipment investments up to the end of 2009. Accordingly a minus of at least 5% in nominal terms is impending. The declining investment activity will continue through the whole year since because of high under utilisation production capacities are sufficiently available. The negative trend in investment activity - according to current calculations - will intensify in the second year half of the year, and also in the first months of 2010 the investment sentiment of the firms is expected to remain extremely weak.