In manufacturing (including food and beverages) the business climate index stagnated in February. The companies were a little more dissatisfied with their current situation than in the previous month but the six-month outlook brightened further. The firms continued to reduce inventories, but since demand lost momentum they were forced to make more frequent price concessions. In light of the again more favourable export outlook, production plans are more often geared to expansion. According to the survey responses, the reduction in employment should weaken.
According to the results of Ifo Business Survey in construction, the business climate index rose again in February. The surveyed contractors again evaluated their current business situation a little more favourably than in January. They appraised their business outlook again noticeably more positively, their scepticism having already clearly declined in January. Building activity was strongly limited by weather conditions, according to the firms: four in five of the survey participants reported weather constraints compared to two thirds a year ago. In contrast, the share of firms that complained about a lack of orders fell over the previous year (33% after 39%). The rate of equipment utilisation remained at about 63% (seasonally and weather adjusted); this was, however, 3 percentage points lower than in February 2009. On average for the construction sectors, the rage of order stocks grew; at 2:5 months (seasonally and weather adjusted) it was as large as one year ago. The company responses indicate that pressure on prices abated somewhat in survey month. In the coming months contractors expect stagnating prices. Levels of personnel will hardly change.
In wholesaling the business climate deteriorated for the first time since March 2009. However, the two components of the indicator developed differently in February. The firms were more frequently dissatisfied with their current situation than in January, but they appraised the business outlook less sceptically. The survey participants increasingly reported too high inventories and their order plans have been revised downwards. Employment plans are now more strongly geared to restrictions. The wholesalers expect a slight increase in price in the coming months.
In February the business climate worsened in retailing. The surveyed companies assessed their current business situation more sceptically than in January and were also more pessimistic with regard to the coming half year. Increased inventories were accompanied by falling prices and more restrictive order planning. For the coming three months, however, the firms do not anticipate as much need to mark-down prices. Also employment plans are less negative.
The business climate indicator for the service sector (without distribution, banking, leasing, insurance or government) rose in February. As in the previous month, the assessments of the current business situation were dominated slightly by negative appraisals, but with regard to the six-month business outlook the surveyed firms are again more confident. Sales were somewhat lower than one year ago, but for the near future the survey participants reckon with increases in sales. The employment outlook has improved again, according to the responses in the service sector.
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