Service Sector: Business Climate Continues to Brighten

In the service sector the business climate improved in October for the fourth month in a row, reaching its second highest level since the survey's launch in 2005 (November 2016: +36.3). Service providers were no longer satisfied with their current business situation, but expressed slightly more confidence in their six-month business outlook. Sentiment in the service sector can be described as excellent. The companies surveyed were more satisfied than ever with their order intake. For the first six months of 2017 the German Federal Statistics Office reported 3.1% growth in employment compared to the previous year. Service providers' turnover also developed favourably in the first six months (+5.6% compared to last year). According to the reports by the service providers surveyed, both turnover and the number of employees also rose in the third quarter. At the same time, they expect this trend in turnover to continue in the months ahead and plan to recruit additional staff. In October 45% of the service providers surveyed cited constraints on their business activities. These specifically included a shortage of skilled staff (27%), which recently had a more negative influence on business activity than on long-term average (13.6%). According to German Federal Employment Office data, jobs in the service sector remain vacant, especially in the recruitment agencies sector. Two thirds of personnel agencies reported a shortage of skilled staff, while this figure was 74% in the freight transport by road sector.