Rapid decline in equipment investments - business climate in leasing remains chilly

The Ifo Business Climate in leasing continues to recover but is still in frosty territory. Responsible for the recent improvement are the business expectations, while the current business situation is still assessed as catastrophic. At the beginning of autumn, nearly half of the survey participants evaluated their business as bad, 39 percent said it was still satisfactory, and 14 percent see their present business situation as good. The investment indicator compiled by the Ifo Institute together with the Federal Association of German Leasing Companies (BDL) points to a drastic decline in plant and equipment outlays. For 2009, on average, a minus of 21 percent over the previous year is likely. In 2010 some weakening of the decline is expected. For the first three quarters under consideration, there will still be a contraction in spending on machines, equipment and vehicles of between eight to nine percent, and thus a decline to the investment level of the weak year 2003.