Service Sector: Business Climate Cools Down Slightly

Companies in the service sector were more satisfied with their current business situation in November. Although the current business situation indicator dropped compared to the previous month, it remained at a high level. At the same time, service providers were far more optimistic about business developments in the months ahead. This, however, was not sufficient to prevent the business climate indicator from dipping slightly, after four consecutive improvements. The service providers surveyed were also satisfied with their order backlog in November and stated that turnover was higher than in previous months and last year in many areas. This suggests that the positive development in turnover shown by official statistics during the first half of 2017 (+5.6% on a nominal basis compared to 2016) will continue into the third quarter. Since demand is expected to pick up in the months ahead, service providers plan to continue their recruitment drive. According to the German Federal Statistics Office, employment increased by 3.1% compared to last year. Service providers expect to implement price increases in the future.