Companies Optimistic in 2Q16, Media Service Providers Not So Much
Information Economy
Economic sentiment among companies in the German information economy sector is optimistic in the second quarter of 2016. While the companies' business expectations remain equally optimistic as they were in the previous quarter, the current business situation even records a significant improvement. The ZEW Sentiment Indicator has increased once again by 3.2 points, thereby reaching an impressive value of 65.5 points. This suggests that the majority of companies evaluates the business situation positively. The media sector, however, forms the exception. This is the result of a survey among companies in the German information economy conducted by the Centre for European Economic Research (ZEW) in June 2016.
The economic sentiment in the information economy has once again brightened in the second quarter of 2016 after the previous quarter had seen a less favourable assessment of the business situation. The corresponding sub-indicator for the business situation currently stands at a level of 64.7 points, rising by 6.2 points compared to the previous quarter. The sub-indicator thus exceeds the crucial 50-point mark, signalling that the majority of companies performed well economically in this quarter. The sub-indicator for the business expectations has remained unchanged compared to the previous quarter, and currently stands at 66.3 points.
ICT sector expects economic conditions to be favourable
The information economy sector consists of the sub-sectors information and communication technologies (ICT), media service providers, and knowledge-intensive service providers. The vast majority of companies in the ICT sector estimate their economic situation to be positive. Compared to the previous quarter, the sentiment indicator gathers speed again and rises significantly by 7.9 points, thereby reaching a long-term high of 74.5 points. The sub-indicator for the business situation has climbed by 11 points, reaching a level of 72.6 points. The companies in the ICT sector are also optimistic with regard to the development of the economic situation in the third quarter of 2016. The sub-indicator for the business situation has further increased by 4.4 points compared to the previous quarter, climbing to a reading of 76.5 points.
Media sector suffers losses in revenue
For the third time in a row the sentiment indicator for the media sector is below the crucial 50-point mark. Its current level of merely 44.2 points indicates that the majority of media service providers evaluate their economic situation negatively. The sub-indicator for the business situation has decreased by 7.6 points compared to the previous quarter, thereby falling to a level of 38.1 points. About half of the companies claim to have generated less revenue than in the first quarter of 2016. Only about one quarter of the companies have recorded an increase in revenues. By contrast, business expectations have considerably improved in comparison to the previous quarter. The corresponding sub-indicator has climbed to a total of 51.3 points.
The knowledge-intensive service providers continue to be optimistic with regard to the economic situation. The sentiment indicator currently stands at a level of 63.6 points. The positive development of the indicator is the result of the business situation being assessed more favourably. Compared to the previous quarter, the corresponding sub-indicator has increased by 6.3 points, to a total of 64.9 points. By contrast, the expectations for the economic development have slightly worsened. The sub-indicator for the business expectations has dropped by 4.1 points, falling to a reading of 62.2 points.
For more information please contact
Daniel Erdsiek, Phone +49(0)621/1235-356, E-mail erdsiek@zew.de
The Economic Sentiment Indicator in the Information Economy
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.
The ZEW Business Survey in the Information Economy
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.
Remark on the projection
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.