Western German manufacturing: Investments set to rise clearly in 2011

According to the latest results of the Ifo Investment Survey, manufacturing firms in western Germany invest a good 38 billion euros in new buildings and equipment in 2010. This corresponds to growth of nearly 3%. Because of virtually stable prices for investment goods, the increase in real terms was a good 3%. In light of the good sales expectations, the investment plans of the firms are predominantly geared upwards for 2011. According to the survey responses, we can expect a clear increase in investments of a nominal 9% (real: +10%) in western German manufacturing. Especially the large firms intend to increase their investment spending; the smaller firms already increased their expenditures for new buildings and equipment strongly last year. As in the previous year, the main investment motivation for western German manufacturing firms will be for replacements. However, this investment motive is losing some weight and investments for expansion are gaining ground. In the investment plans for 2011, the share of the expansion motive lies at 27%.