West German Industry reduces investment spending in 2002

According to the latest results of the Ifo Investment Survey, the manufacturing industry in west Germany increased its investment spending in 2001 by about €46 billion, which was nearly 2% higher than the previous year. In real terms the rate of change was about one percentage point. These results show that investments in west German manufacturing were more favourable than in the overall economy. This is attributable to the investment activity of a few industries. Automobile building, for example, increased its spending on new buildings and equipment by around 13% in 2001. In their investment planning, west German industrial firms tended to be quite reserved, however. On the basis of current planning, west German manufacturers will reduce their investment spending in 2002 for the first time since 1994. In nominal and real terms, a decline of 2% is expected, with investment cuts coming from smaller firms in particular. According to the survey responses, capacity expansion is still the major investment motive: 53% of the surveyed firms invested primarily in enlargement measures in 2001. However, the enterprises have not enlarged their existing production programme as much as they have expanded their production capacities in the form of a change of their product range. Rationalisation measures were a investment motive for 22% of the west German firms in 2001 and for 23% of the firms in 2002.