German Information Economy - Optimism Prevails Despite Slight Downturn

In the third quarter of 2014, the economic sentiment among companies in the information economy remains positive. Even though the ZEW Sentiment Indicator for the Information Economy has recorded a quarter-on-quarter drop by 1.6 points, the high level of 63.1 points signals an ongoing positive development of the sector.

This trend is also reflected in the fact that more than half of the companies in the information economy sector were able to improve their business situation compared to the previous quarter, or expect a positive economic development in the final quarter of 2014. These are the findings of a survey conducted by the Centre for European Economic Research (ZEW) in the information economy sector in September 2014.

The information economy consists of the sub-sectors information and communication technologies (ICT), media service providers, and knowledge-intensive service providers.

In the current survey, the economic sentiment among ICT companies is less positive than in the previous quarter. The sentiment indicator loses 3.4 points. This decrease can be attributed to the slightly clouded evaluation of the business situation as well as to less optimistic economic expectations for the coming quarter. However, the remarkable reading of 65.7 points indicates that the economic trend in the ICT sub-sector is still considered positively.

In the previous quarter the indicator for the media service providers exceeded the crucial 50-points mark. Increasing by 1.8 points in the current survey, the indicator has reached 56.1 points, signalling a positive economic climate in the sub-sector. This favourable development results from a significant quarter-on-quarter improvement of business expectations for the fourth quarter of 2014. By contrast, the sub-indicator for the business situation has slipped just below the 50-points mark with a current reading of 49.3 points.

Despite a slight decrease of the sentiment indicator for the knowledge-intensive service providers, a positive business climate prevails among the companies in this sub-sector. Compared to the previous quarter, the indicator has lost 1.4 points, but remains on a considerable level of 62.6 points. Decreasing slightly in the current quarter, the sub-indicators for the business situation and for the business expectations both contribute to the decline of the sentiment indicator for the sub-sector. The current values of 61.7 (sub-indicator for the business situation) and 63.5 points (sub-indicator for business expectations), however, confirm that the clearly optimistic climate remains. Within the sub-sector, PR and business consultants are the most optimistic knowledge-intensive service providers.

For more information please contact

Daniel Erdsiek, Phone +49/621/1235-356, E-Mail erdsiek@zew.de

The Economic Sentiment Indicator in the Information Economy

The Economic Sentiment Indicator in the Information Economy is composed of the four components sales situation, demand situation, sales expectations and demand expectations (each in comparison with the previous and following quarter). They are equally taken into account for the calculations. Sales situation and demand situation form a partial indicator reflecting the business situation. Sales expectations and demand expectations form a partial indicator reflecting the business expectations. The geometrical mean of the business situation and the business expectations amounts to the value of the Economic Sentiment Indicator in the Information Economy. The sentiment indicator can adopt values between 0 and 100. Values above 50 indicate an improved economic sentiment compared to the previous quarter, values smaller than 50 indicate deterioration compared to the previous quarter.

The Economic Survey Conducted by ZEW

About 5,000 businesses with a minimum of five employees participate in the quarterly survey conducted by ZEW. The companies surveyed belong to the following business sectors: (1) ICT hardware, (2) ICT service providers, (3) media, (4) law and tax consultancy, accounting, (5) public relations and business consultancy, (6) architectural and engineering offices, technical, physical and chemical analysis, (7) research and development, (8) advertising industry and market research, (9) other freelance, academic and technical activities. Combined, all nine sectors make up the economic sector of the information economy. The ICT sector consists of ICT hardware and ICT service providers. The last six sectors make up the knowledge-intensive service providers.

Overview of the ZEW economy survey (in German)