Economic Sentiment among ICT Service Providers and Knowledge Intensive Service Providers Further Improves
Service Providers of the Information Society
The survey results of ZEW and Creditreform contribute to the ZEW-IDI, a sentiment indicator for the economic sector service providers of the information society. The ZEW-IDI increases in the fourth quarter of 2009 to 58.6 points. It now stands considerably above the critical value of 50 points. This indicates that the economic sentiment has brightened compared to the previous quarter. Despite a decrease of 0.3 points to 61.8 points, the partial indicator for business expectations regarding the first quarter of 2010 still stands considerably above 50 points. "The business expectations decreased only slightly in comparison to the previous quarter. This indicates that the business expectations regarding the first quarter of 2010 are stable and on a good level", explains Miruna Sarbu, researcher at the Centre for European Economic Research (ZEW) in Mannheim. The partial indicator of the ZEW-IDI regarding the current business situation has improved. It now stands at 55.5 points. For the first time since the fourth quarter of 2008 the partial indicator is above the important value of 50 points. This indicates that the companies assess their current business situation more optimistically.
The economic sector service providers of the information society comprises ICT service providers and knowledge intensive service providers. The current situation of ICT service providers, including software businesses, IT services, ICT specialised trade and telecommunication services, has slightly worsened in the fourth quarter of 2009. The respective sentiment indicator has decreased by five points to 53.2 points. However, this value still indicates an improvement of the economic situation in comparison to the previous quarter. The optimism among the knowledge intensive service providers, including, among others, tax consultancy and accounting, architecture and advertising companies, is more pronounced than optimism among ICT service providers. The sentiment indicator for this subsector stands at 55.3 points in the fourth quarter 2009.
The economic situation in every subsector of the economic sector service providers of the information society is as follows: The economic situation of software companies and IT services has improved in the fourth quarter of 2009. The companies report an increase in turnovers and expect to employ more staff in the first quarter of 2010. The subsector tax consultancy and accounting reports increasing turnovers and higher demand in the fourth quarter of 2009.
The companies in this subsector expect this situation to last also in the first quarter of 2010. The economic situation for technical consultants and planners has also improved in the fourth quarter of 2009. The majority of companies report increasing turnovers, steady prices and stable demand. The situation is similar in the subsector research and development. The companies in this subsector report an increase in turnovers in the fourth quarter of 2009 and also expect this in the first quarter of 2010. However, the majority of companies also report a decline of profits in the fourth quarter of 2009. Management consultants, architects and advertising companies evaluate their economic situations as stable. Management consultants report unchanged turnovers and steady prices. Advertising companies on the other hand report a stable demand in the fourth quarter of 2009 and expect an increasing demand in the first quarter of 2010. The economic situation of ICT specialised trade companies is divided in the fourth quarter of 2009. A vast number of companies report an increase in turnovers. A similar number of companies, however, report declining turnovers. The only exceptions with respect to their current business situation are the telecommunication companies. They assess their current business situation rather pessimistically. The majority of advertising companies report declining turnovers, but expect increasing turnovers and profits in the first quarter of 2010.
Zentrum für Europäische Wirtschaftsforschung GmbH (ZEW)
The ZEW-IDI 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. 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 sentiment indicator can adopt values between 0 and 100. Values greater than 50 indicate an improved economic sentiment compared to the previous quarter, values smaller than 50 indicate 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 (ftp://ftp.zew.de/..., German only).
The economic survey conducted by the ZEW/Creditreform:
About 900 businesses participate in the quarterly survey. The economic sector service providers of the information society consists of information and communication technology (ICT) service providers (businesses of the subsectors software and ITservices, ICT specialized trade and telecommunication services) and knowledge intensive service providers (businesses of the subsectors tax consultancy and accounting, business consultancy, architectural offices, technical consultancy and planning, research and development and advertising). An overview of the ZEW/Creditreform economy survey is available online at www.zew.de/dienstleister (German only).
Comment on the projection:
To ensure the analyses' representativity, the 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' therewith reflects the share of turnovers of the businesses.