A ray of hope for EDP service providers

The 28th Ifo Business Survey of EDP Service Providers, conducted in January and February 2002, revealed that the drastic worsening of the world economic situation last year also left its marks on the success-accustomed software and EDP services sector. The business climate continued the deterioration that began in Autumn 2000; after September 11 the indicator hit its lowest level since the introduction of the survey. Now, signs are emerging that a turning point is likely in the German software and EDP services sector. The business climate has improved slightly for the first time since Autumn 2000, an improvement attributable, however, only to a somewhat more favourable assessment of the business situation in the fourth quarter of 2001: 30% of the firms appraised their business in the final quarter of 2001 as favourable, 56% as satisfactory, and 14% as poor. The six-month outlook did not improve, however, and is still only assessed as “cautiously optimistic”. The downturn is expressed increasingly strongly in employment numbers, and employment growth has lost a considerable amount of momentum. Two out of three firms reported constraints in their business activity in the fourth quarter of 2001, about half of the firms still listing low order reserves as the leading constraint.