Plunge in equipment investments -business climate in leasing shows signs of bottoming out

The Ifo Business Climate for the leasing industry improved somewhat over the dramatic deterioration in the last quarter of 2008. The first quarter of 2009 showed signs of a bottoming-out, the climate index rising thereafter three times in succession within the second quarter. This improvement can be entirely attributed, however, to improved business expectations; the current business situation continues to be rated as bad. Every second respondent (52%) in the leasing branch assessed his current business situation as bad, 36% as satisfactory, and only 12% as good. The investment indicator compiled by the Ifo Institute in conjunction with the Federation of German Leasing Companies points to a further strong decline in equipment investments in 2009. The 20% drop forecasted would mean a fall to a level not seen since 2004. The decline is expected to continue during the first half of 2010, with a 7-8% fall in machine, equipment and vehicle investments on a year-on-year basis.