Service Providers of the Information Society - Economic Sentiment Improves among ICT Service Providers and Knowledge Intensive Service Providers

The ZEW-IDI, a sentiment indicator for the economic sector service providers of the information society in Germany, which includes the knowledge intensive service providers as well as the ICT-service providers, increases by 5.6 points to a value of 54.7 points in the third quarter of 2009. For the first time this year the indicator now is above the critical value of 50 points which points to an improvement of the economic sentiment compared to the previous quarter. The main cause of this positive development is the distinct brightening of business expectations regarding the fourth quarter of 2009. The corresponding partial indicator for the business expectations rises to a value of 62.1 points in the third quarter of 2009. "This figure makes clear that companies are optimistic with regard to their business situation in the fourth quarter of 2009," explains Miruna Sarbu, researcher at the Centre for European Economic Research (ZEW) in Mannheim. The ZEW-IDI is based on a business survey among service providers of the information society, conducted by the ZEW in cooperation with the credit reference agency Creditreform, Neuss, in September 2009 (details regarding the survey are provided below).

The current situation of the ICT-service providers, which include software businesses, IT services, ICT-specialized trade and telecommunication services, has improved tremendously. The respective sentiment indicator now stands at 58.2 points. This is even higher than the value of the ZEW-IDI for the whole sector service providers of the information society and indicates a brightening of the economic situation compared to the previous quarter. The optimism among the knowledge intensive service providers, which include, among others, tax consultancy and accounting, management consultancy, architecture and advertising companies, is slightly less pronounced than that of the ICT-service providers. The sentiment indicator for this sub-sector stands at 51.7 points in the third quarter of 2009.

The economic situation of the ICT-specialized trade has improved noticeably in the third quarter of 2009. The businesses report an increase in sales and expect the same for the fourth quarter of 2009. The ICT-specialized trade also reports an increase in demand and a fall in prices. The economic situation of the telecommunication services has improved in the third quarter of 2009 as well. Most businesses have seen an increase in turnovers. They expect this development to continue in the following quarter and also predict a reduction of prices. In comparison to the second quarter of 2009, the situation of the management consultancies has improved in the third quarter of 2009. Most businesses report increasing turnovers and expect increasing turnovers for the following quarter as well. The situation in the branch research and development is similar. The businesses of this branch report increasing turnovers in the third quarter of 2009 and expect this increase to continue also in the fourth quarter of this year. Management consultantcies record an increasing demand in the third quarter. For the following quarter, they expect an increase of gain and demand.

The branches software businesses and IT-services, tax consultancy and accounting, architecture and technical consultancy and planning assess their economic situation as stable. While tax consultancy and accounting report unchanged turnovers and unchanged demand, technical consultancies and planning expect an increase in demand in the fourth quarter of 2009. The branches software businesses and IT-services do not expect any change in demand for the fourth quarter of 2009.

The situation of the advertising companies is different. Businesses there are still pessimistic regarding their economic situation. The majority of advertising companies report decreasing turnovers and gains and a decline in demand.

The ZEW-IDI

The ZEW-IDI is composed of the four components turnover situation, demand situation, turnover expectations and demand expectations (in each case 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 which reflects the business situation. The geometrical mean of the business situation and the business expectations amounts to the value of the ZEW indicator of the service providers of the information society. The mood indicator can adopt values between 0 and 100. Values greater than 50 point to an improved economic mood compared to the previous quarter, values smaller than 50 to a deterioration compared to the previous quarter. Detailed information about the development and calculation of the ZEW-IDI is provided in the ZEW documentation No. 03-09.

The economic survey conducted by the ZEW/Creditreform

About 900 businesses each participate in the quarterly survey. The ecomonic sector service providers of the information society consists of information and communication technology-(ICT) service providers (businesses of the branches software and IT-services, ICT specialized trade and telecommunication services) and knowledge intensive service providers (businesses of the branches tax consultancy and accounting, business consultancy, architectural offices, technical consultancy and planning, research and development and advertising). An overview of the ZEW/Creditreform business survey is provided on the ZEW project site. For further information in German language only, please consult our homepage at www.zew.de/dienstleister.

Comment on the projection

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

For further information please contact

Miruna Sarbu, Phone: +49/621/1235-334, E-Mail: sarbu@zew.de