Western German Manufacturing: slight increase in investment

The investment propensity of western German manufacturing firms has been clearly dampened this year by the poor economic situation, in particular the weak demand and the strongly reduced capacity utilisation. According to the latest results of the Ifo Investment Survey, gross fixed capital formation in western German manufacturing was almost 22% below the level of 2008. According to companies' current plans for 2010, investments will rise only slightly: by nearly 2%. For 2010 only a slight improvement of the investment climate is to be expected. Current company plans point to a slight increase in investments of only about 2%. Differentiating the investment plans according to company sizes, primarily large enterprises will increase their investments in 2010 while the small firms are planning further cuts. In light of the currently low capacity utilisation, it is not surprising that the investment motive "expansion" has clearly lost importance, now being ranked in second place. The main motive of investment activity, both for this and next year, is for "replacements".