Growing Optimism Among Companies in All Sub-Sectors

In the third quarter of 2016, the economic sentiment among companies in the German information economy remains positive. The corresponding ZEW Economic Sentiment Indicator, which had already closed at a high level in the previous quarter, continued its growth by climbing an extra 3.4 points, reaching a total of 68.9 points. This suggests that a vast majority of the companies evaluates the economic situation of the information economy positively. This is the result of a survey among companies in the German information economy, conducted by the Centre for European Economic Research (ZEW) in September 2016.

The growth of the sentiment indicator was mainly driven by the positive development of business expectations regarding the turnover as well as the demand for their products and services. The sub-indicator for the business expectations has increased by 6.6 points compared to the previous quarter, climbing to a reading of 72.9 points. Far exceeding the critical 50-point mark, the sub-indicator indicates that most companies in the information economy expect an increase in turnover and demand for the fourth quarter of 2016. Along with the expectations, the current business situation was also assessed favourably by the majority of companies. The corresponding sub-indicator has climbed to a total of 65.1 points.<o:p></o:p>

Sentiment indicator for the ICT sector reaches long-term high<o:p></o:p>

The information economy sector consists of the sub-sectors information and communication technologies (ICT), media service providers, and knowledge-intensive service providers. After reaching a long-term high in the previous quarter, the sentiment indicator for the ICT sector suggests a further improvement in the economic climate. In the current survey, the corresponding sub-indicator has grown by 3.7 points to 78.2 points. The majority of ICT service providers have evaluated both the current business situation and the business expectations positively. The sub-indicator for the business situation has reached a level of 73.5 points, indicating a positive quarter-on-quarter development. The corresponding sub-indicator for business expectations has gained 6.8 points, thereby reaching a value of 83.3 points.<o:p></o:p>

Media service providers more optimistic about business situation and business expectations<o:p></o:p>

Economic sentiment in the media sector has brightened again in the third quarter of 2016. Having remained below the critical 50-point mark throughout the last three quarters, the sentiment indicator has now reached a level of 58.2 points. Compared to the previous month, it has risen by 14 points. This improvement is the result of a more positive assessment of both the business situation and the business expectations. Climbing to a current value of 64.4 points, the sub-indicator for business expectations suggests that a clear majority of media service providers has an optimistic outlook on the future. This trend is attributable to a more favourable assessment of the upcoming year-end business.<o:p></o:p>

The knowledge-intensive service providers retain their positive economic sentiment. The sentiment indicator remains almost unchanged, currently standing at 63.8 points. The fact that the sentiment indicator for the information economy remains at an almost constant level is the result of both sub-indicators running counter to each other. Whereas the sub-indicator for the business situation has dropped by 3.8 points compared to the previous quarter, the sub-indicator for business expectations has increased by 4.5 points. Nevertheless, both sub-indicators closed clearly above the 50-point mark. While the sub-indicator for the business situation has reached a level of 61.1 points, the sub-indicator for the business expectations stands at 66.7 points.<o:p></o:p>

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For more information please contact:<o:p></o:p>

Daniel Erdsiek, Phone + 49 (0)621/1235-356, E-mail erdsiek@zew.de

The Economic Sentiment Indicator for the Information Economy:<o:p></o:p>

The Economic Sentiment Indicator for 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. The sales situation and the demand situation form a sub-indicator reflecting the business situation. Sales expectations and demand expectations form a sub-indicator reflecting the business expectations. The geometrical mean of the business situation and the business expectations is the value of the Economic Sentiment Indicator in the Information Economy. The sentiment indicator can take on values from 0 to 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.<o:p></o:p>

The economic survey conducted by ZEW<o:p></o:p>

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. Sectors three to nine make up the knowledge-intensive service providers. Overview of the ZEW Business Survey in the Information Economy (in German) http://www.zew.de/konjunktur.<o:p></o:p>

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Remark on the projection:<o:p></o:p>

To ensure that the analyses are representative, ZEW projects the answers of the survey participants with the sales value of the businesses with regard to the entire information economy sector. The phrasing "share of the businesses" thus reflects the sales share of the respective businesses.<o:p></o:p>

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