These are the findings of an economic survey carried out amongst business-related service providers by the Mannheim Centre for European Economic Research (ZEW) in collaboration with the “Verband der Vereine Creditreform”, Neuss, in December 2001. The survey is carried out on a quarterly basis among approximately 1,000 businesses in the following sectors: tax advisers and certified public accountants, business consultants, architects, technical planners, vehicle rental companies, machine rental companies, cargo handling and logistics firms, software providers, advertising agencies and waste management firms.
Among West German business-related service providers the annual rate of growth in turnover fell from 2.7 per cent in the third quarter to 1.8 per cent in the fourth quarter. Meanwhile, the rate of growth in turnover among East German business-related service providers sunk only slightly, by 0.2 percentage points. However, turnover among East German service providers stagnated, exhibiting a seasonally-adjusted annual rate of growth of just 0.1 per cent in the fourth quarter of 2001.
The difficult economic climate is also reflected in the development of other business factors among the business-related service providers. In the fourth quarter of 2001, there were more companies reporting a decrease in demand than an increase compared to the previous quarter. There were also more companies reporting lower prices and lower revenue. These developments have had a particularly marked effect on the activities of East German service providers. Considerably more companies in this part of Germany reported job cuts rather than new hires.
Among West German business-related service providers at least, there is optimism about the near future. They expect demand, turnover and revenue to improve in the first quarter of 2002. Meanwhile, East German service-providers predict these business factors to continue to worsen.
The individual branches within the business-related service sector have been affected to varying degrees by the general economic downturn. The most stable appear to be software providers who, thanks to increasing demand, have seen a rise in turnover and as a result have managed to maintain or even improve their level of revenue in spite of great pricing pressure. The number of companies in this sector reporting new hires was also higher than average. Among vehicle rental companies, there were also more firms reporting an increase than a decrease in turnover. While the revenue for the majority of companies in this sector fell in the last quarter of 2001, the number of companies who expect revenue to increase in the first quarter of 2001 is higher than average.
Hit particularly hard by the tough economic climate are machine rental companies. The number of companies in this sector reporting lower turnover was higher than average. Demand has fallen considerably and the majority of companies are reporting decreases in revenue. As a result, the number of workers employed in this branch fell most noticeably in the fourth quarter of 2001.
Alongside vehicle rental companies, business consultants as well as tax advisors and accountants were the most optimistic in terms of their expectations for the first quarter of 2002. Meanwhile, sectors of the economy which are particularly dependent on construction, such as architecture firms, companies involved in technical consultancy and planning as well as sewage and waste collection firms, are bracing themselves for decreases in revenue.