Services: Further Cooling of the Business Climate

In the service sector optimism regarding the business outlook weakened noticeably over the course of the past three months, falling below the long-term average in January. In contrast, the current business situation, which is at a high level, was assessed somewhat more favourably. This relativises the fourth decline in the business climate indicator, which was still noticeably above its long-term average in January. The current positive situation can also be seen in the sales trend. Companies stated that they were able to increase their sales both in the previous months and in comparison with the same month last year. This is in line with the figures published by the Federal Statistical Office, according to which sales in the third quarter of 2018 were 4.7% higher than in the same quarter of the previous year. Although order backlogs were assessed somewhat less frequently as comparatively large, they are still at a relatively high level. The survey participants also look forward with confidence to sales development in the coming three months. The planned increase in employment among service providers is somewhat restricted, but continues to point to an expansive personnel policy. However, many of the surveyed companies are facing employment constraints. Nearly 30% reported that they felt a labour shortage and 21% spoke of a shortage of skilled workers. Other factors hampering business activity played a subordinate role, the weather still being the most frequently mentioned factor at 5%.