German Information Economy - Optimistic Outlook in all Three Sub-Sectors

Optimism has continued among companies in the information economy in the second quarter of 2014. Reflecting this positive trend, the ZEW Sentiment Indicator for the Information Economy has stabilised at an impressive total of 64.7 points. In the second quarter of 2014, the sub-indicators for the business situation and business expectations in the information economy have converged again.

Compared to the previous quarter, the sub-indicator for the business situation has gained four points and now stands at 64.4 points. The sub-indicator for business expectations has lost 4.6 points and has stabilised at the 65-points level. Both sub-indicators range significantly above the 50-points mark, which indicates an overall positive sentiment in the information economy. In line with these trends, the sentiment indicator for the third sub-sector of the information economy, the media service providers, has also exceeded the crucial 50-points mark. These are the findings of a survey conducted by the Centre for European Economic Research (ZEW) among companies in the information economy sector in June 2014.

The information economy sector includes the sub-sectors of information and communication technologies (ICT), media service providers and knowledge-intensive service providers. The sentiment indicator for the ICT sector has slightly decreased by 1.2 points quarter-on-quarter to 69.1 points, thus reflecting a still positive economic sentiment in this sub-sector. The sub-indicator for the business situation has climbed to a level of 68.7 points. The 3.6 points quarter-on-quarter increase can mainly be attributed to the improved sales situation of the companies. Compared to the previous quarter, the sub-indicator for business expectations has dropped by 6.3 points, but is still at a high level of 69.5 points.

For the first time since the third quarter of 2013, the sentiment indicator for the media service providers has exceeded the critical 50-points mark. In the past two quarters, the sentiment indicator remained at 49.7 points, but in the second quarter of 2014, it has climbed to 54.3 points. Recording a total of 53.8 and 54.7 points, both the sub-indicator for the business situation and the sub-indicator for business expectations have developed positively and are now above the critical 50-points mark. The majority of media service providers hence assess the business situation and business expectations positively.

The level of optimism among the knowledge-intensive service providers is almost unchanged. Even though the sentiment indicator has lost 0.2 points, it remains on a high level of 64 points. The decline in business expectations is almost evened out by the positive development of the business situation. The sub-indicator for business expectations has fallen from 68.9 to 64.1 points. Increasing by 4.1 points, the sub-indicator for the business situation has reached a total of 63.8 points.

For more information please contact

Daniel Erdsiek, Phone 0621/1235-356, 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)

Remark on the Projection

To generate a representative analysis, ZEW projects the answers of the firms participating in the survey with their shares of total turnover realized in the sector of the German IT related service providers. The phrasing ‘share of the businesses’ therewith reflects the share of turnovers of the businesses.