German service providers quite pessimistic

German service providers assess business prospects for the twelve months to come in a more pessimistic way than in spring. The reasons for this are the global crisis on financial markets and increasing fears that Germany might be faced with a longer slowdown in its economy. This is the finding of the autumn survey carried out by KPMG in the course of which about 500 German service providers were interviewed.

The respondents predicted a very weak business and turnover development for the coming twelve months. The findings of this latest survey are the most negative since the survey was first carried out in April 2006. Currently the number of those expecting their business situation to deteriorate is as high as that of those who think that their business situation is going to improve (27.7% each). In spring the optimists had still by far outnumbered the pessimists.

Optimists are convinced that the introduction of new services and planned acquisitions will result in increased sales. Rather pessimistic companies explain their views by relating to bad prospects for the global economy in the wake of the financial crisis.

The survey also revealed that German service providers expect the number of incoming orders to fall over the next twelve months to come. Profit expectations were also less optimistic than in the past: due to price reductions in order to keep market share and stimulate demand operative margins are expected to be negatively affected. As a consequence the number of respondents expecting profits to fall is three times as high (42%) as that of those expecting profits to rise (15%).

These pessimistic expectations give reason to believe that German service providers might presumably cut jobs over the next months to come. At the same time German companies plan to reduce investments in particular in fields which are not part of their core business. GERMAN

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