Information Industry in Germany - Turnaround of Economic Sentiment in the ICT Sector

In the fourth quarter of 2011, the information industry in Germany has recovered slightly from the weak economic sentiment during the third quarter. The ZEW Economic Sentiment Indicator for the Information Industry increases by five points to 61.6. This improvement of the economic sentiment in the fourth quarter is mainly due to the developments in the ICT sector, which has recovered considerably after a strong decline in the previous quarter. These are the findings of an economic survey conducted in December 2011 by the Centre for European Economic Research (ZEW) in Mannheim in cooperation with Creditreform, Neuss, among representatives from the information industry.

In the fourth quarter of 2011, the indicator for the current business situation increases by 15.4 per cent and now stands at 67.9 points. This means that the current business situation is much better than companies had expected in the third quarter of 2011. At the same time, the indicator for business expectations for the first quarter of 2012 declined by 5.2 points to 55.8 points. As the indicator value is above 50, a slight economic upswing can be expected for the coming months. The continuing downtrend, however, shows that the economic sentiment tends to be increasingly pessimistic.

In the current survey, the assessment of the economic situation of the ICT sector improves more significantly than in any other sector, following a massive decline in the previous quarter. The sentiment indicator for the ICT sector increases by 15.2 points and now stands at 65.5 points. The indicator for the business situation climbs by 28.3 points to 71.6 points. In the ICT service sector in particular, 54 per cent of the companies registered an increase in net turnover and 42 per cent registered an increase in demand in the fourth quarter of 2011. In the hardware sector, a favourable development can be noted as well. Yet, only 16 per cent of hardware companies registered an increase in turnover and 14 per cent an increase in demand.

In the media industry, the sentiment indicator increases slightly by 2.4 points and reaches 54.7 points. However, two opposite effects are concealed behind this moderate improvement: On the one hand, the indicator for the current business situation increases by 20.4 points to a value of 69.8 points. On the other hand, the indicator for the business expectations decreases by 12.5 points to 42.9 points. For the first time in 2011, the indicator falls under the 50 point mark. These figures show that the media industry does not take a very optimistic view of the coming months.

In contrast to the ICT sector and the media industry, the economic sentiment indicator for knowledge-intensive service providers continues to decline but with 60.5 points the indicator still clearly exceeds the 50 points mark. While the business situation in the fourth quarter of 2011 improves slightly compared with the previous quarter, the business expectations indicator for the first quarter of 2012 decreases by 9.1 points.

For further information please contact

Miruna Sarbu, Phone +49 (0)621/1235-334, E-mail sarbu@zew.de

The Economic Sentiment Indicator for the Information Industry

The Economic Sentiment Indicator for the Information Industry is composed of the four components turnover situation, demand situation, turnover expectations and demand expectations (each in comparison with the previous and following quarter, respectively). They are used for the calculations with equal importance. Turnover situation and demand situation form a partial indicator reflecting the business situation. Turnover 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 of the Information Industry. 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/Creditreform

About 8,000 businesses with a minimum of five employees participate in the quarterly survey conducted by ZEW and Creditreform. 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. All nine sectors combined make up the economic sector of the information industry. 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/Creditreform economy survey (German language only)

Comment on the projection

To ensure the analyses' representativity, ZEW projects the answers of the survey participants with the turnover value of the businesses with regard to the entire economic sector service providers of the information society. The phrasing "share of the businesses" thus reflects the share of turnover of the businesses.