Positive Economic Trend in German IT-Related Services Sector

The annual rate of growth in turnover in the German IT-related services sector increased to 2.1 percent in the third quarter of 2003, up from 1.8 percent in the previous quarter.

The gentle economic recovery in this sector, noticeable already in the second quarter of 2003, continues. The enterprises are also optimistic that they will achieve further turnover growth in the fourth quarter of 2003.

This is the result of a business survey among German IT-related service providers that the Centre for European Economic Research (ZEW) and the credit reference agency Creditreform conducted in September and October 2003. 1,200 enterprises participated in this survey. The sector of the IT-related service providers consists of the Information and Communication Technology (ICT) service providers (enterprises of the branches computer services and leasing, ICT-specialised trade as well as telecommunication services) and knowledge intensive service providers (enterprises of the branches tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, research and development as well as advertising).

The annual turnover growth of the West-German IT-related service providers rose to 2.3 percent in the third quarter of 2003. The East-German IT-related service providers grew at an annual rate of 0.2 percent during this time. Their annualised turnover growth was positive for the first time since the fourth quarter of 2002.

Up until now, the fourth quarter of 2002 had been the last quarter in which the German IT-related service providers achieved a comparable growth level. At that time the sector was growing at a rate of 2.1 percent, up from 1.4 percent in the third quarter of 2002. The upswing which was expected to follow in the first half of 2003 subsequently failed to materialise, however: In the first quarter of 2003 the annual turnover growth rate fell by 0.4 percentage points to 1.7 percent. It is presumably because of the disappointing first half of 2003 that business analysts are careful not to interpret current positive signals from the overall economy too optimistically.

Demand statistics also signal economic improvement in the German IT-relates services sector: The balance of positive and negative demand changes increased from -8 percentage points in the second quarter 2003 to 33 percentage points in the third quarter of 2003. The turnover share of those enterprises expecting the increasing trend in demand to last through the fourth quarter of 2003 is 40 percent. Most of the remaining enterprises expect stable demand conditions. The positive demand developments also encourage positive expectations with respect to future turnover development. The balance of positive and negative expectations for the turnover development in the fourth quarter of 2003 is 38 percentage points, up from 25 percentage points in the previous quarter.

Contact

Dr. Margit Vanberg, E-mail: vanberg@zew.de