Information Industry – Noticeable Decrease of Sentiment within the ICT Sector

After having peaked during the second quarter of 2011, the sentiment in the economic sector of information industry has tarnished noticeably during the third quarter. The ZEW Sentiment Indicator Information Industry drops by 13.6 points to 56.6 points. The negative development is mainly caused by the decrease of sentiment in the information and communication industry. The indicator for this sector drops by 25 points. This is the result of the newly shaped economic survey, conducted in September 2011 by the Centre for European Economic Research (ZEW) in Mannheim in cooperation with Creditreform, Neuss.

Within the entire information industry, the indicator for the current business situation decreases by 18 points to 52.5 points compared to the previous quarter. A value of slightly more than 50 points reflects an all in all nearly stagnant turnover and demand situation. The indicator for business expectations with a value of 61 points, indicated a slightly optimistic assessment for the next quarter, but still, with a decrease by 9.1 points, tarnished economic expectations compared to the previous quarter are also registered. With a decrease of the sentiment in the ICT sector from 75.3 to 50.3 points, a significant drop of the economic sentiment can be observed. The indicator for the business situation decreases from 74 to 43.3 points, and therefore stays behind the expectations of the previous quarter. A value of less than 50 points reflects a tendency towards decrease in demand and turnover in the third quarter of 2011. The indicator for business expectations also drops by 18.2 points, although with 58.4 points, it still ranges clearly above the limit of 50 points. The ICT sector should recover slightly during the next quarter. There is a clear difference between hardware manufacturers and service providers within the ICT sector. While with hardware manufacturers, the number of companies with increasing and decreasing turnover is nearly balanced, 65.9 per cent of ICT service providers record a decrease, and only 18.6 per cent an increase in turnover. In the media industry the economic sentiment is also noticeably deteriorating. However, the decrease of the corresponding indicator with ten points is less than in the ICT sector. Therefore, the indicator for the business expectations with a decrease by 10.8 to 55.4 points ranges ahead of the indicator for the business situation, which dropped by 9.2 point to 49.4 points during the third quarter. Within the information industry the knowledge-intensive service providers have been least affected by the deterioration of the economic sentiment. The indicator for this sector only drops by 4.8 points to a value of 63.1 points. With a value of clearly more than 50 points the sentiment is still good, even with the economic dynamics having deteriorated.

For further information please contact

Miruna Sarbu, Phone +49 621/1235-334, E-mail sarbu@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 8,000 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.

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'.