Manufacturing (Germany):
Clear fall in capacity utilisation

In manufacturing, the business situation has deteriorated again. The indicator for the current business situation has dropped precipitously since the summer of last year. This dramatic development is evident in the information provided by the firms on their capacity utilisation: whereas the industrial firms in autumn 2008 were still utilising their equipment at a historically average extent, this rate has now fallen considerably. Since business-cycle fluctuations can be understood as modifications of the aggregate utilisation rate, the drastic decline in capacity utilisation in manufacturing reflects the sharpness of the downturn in this economic sector. The range of order stocks has clearly declined, and most of the survey participants have assessed their available equipment capacities as too large with regard to the demand expected in the next twelve months. About one half of the survey participants have complained about insufficient orders. The competitive position in the world market has been assessed as largely unchanged. Nevertheless, the firms anticipate a further decline in export business in the coming months. On the whole, the sceptical voices predominate with regard to the six-month business outlook. The survey participants having lowered their business expectations since May 2008 without interruption, this development was interrupted in January. The business outlook is now appraised somewhat less pessimistically.