Leasing: Signs of slow recovery

According to the latest results of the Ifo Business Survey, the business climate in leasing has deteriorated again. The smoothed values, however, have an upward trend so that the business climate seems to have bottomed out. The economic recovery is only very slow, however, with the business climate a good distance from the previous-year level. The current business conditions have continued to deteriorate even though the positive assessments still predominate, if only just barely. Every fifth enterprise evaluated the second-quarter business situation as favourable, 68% as satisfactory, but 12% of the survey participants felt the situation is now unfavourable. The enterprises placed less confidence in future business than in March. Thus for all of 2002 we can hardly expect positive growth rates of leasing investments but rather stagnation. The weak investment activity is also suppressing employment numbers: employment growth has already lost speed since the summer months of 2000. According to the survey results new hirings and dismissals balanced out. Especially the smaller firms reported stable employment levels, the larger ones, however, have tended to dismiss more employees. The business expectations are clearly marked by caution, so that employment is likely to stagnate also in the third quarter.