bvdm economic telegram December 2022: Business expectations again more positive

In November the decision-makers at printing and media companies surveyed by the Ifo Institute assessed their current business situation as worse than in the previous month. However, their expectations for business development over the next six months were again less pessimistic than in the previous month. The values for the business climate therefore remained virtually unchanged in December. The business climate, which is a good leading indicator for the production trend in the print and media industry, is determined by the characteristics of the current and expected business situation.

After stagnating in November, the seasonally adjusted business situation index lost around 4.7 per cent in December compared to the previous month. The index stood at 88.0 points, the lowest level of 2022 on a seasonally adjusted basis. Advertising printing was particularly hard hit, with around 37 per cent of companies assessing the current business situation as poor. For label and packaging printers, on the other hand, the assessment of the business situation in December is predominantly positive. Only around 5.1 per cent of the companies surveyed said the business situation was poor, while around 51 per cent assessed the business situation in December as good. Looking at the year as a whole, the index values for the print and media industry are on average around 2.2 per cent higher than the values for 2021. Even though some indicators in recent weeks point to a stabilisation of the situation in the procurement markets for primary products, especially printing paper, the persistently high cost pressure continues to have a negative impact on the business situation of companies. Added to this is the gloomy order situation. In December 2022, 47.7 per cent of the companies surveyed rated their order backlog as "too low". Although this is around 9 percentage points less than in the previous month, it is 29 percentage points more than in the same month of the previous year.

Despite continuing uncertainties regarding the further development of the overall economy and procurement markets, print and media companies are again less pessimistic about their business prospects for the first half of 2023 than they were in the previous month. In December the seasonally adjusted index of business expectations increased by around 4.9 per cent month-on-month. However, at 86.3 points, the index is about 1 percentage point below the annual average of 2022 and about 14 percentage points below the value of the same month last year. Only around 2.2 percent of the companies surveyed assess the development of the business situation in the next 6 months as positive, while around 43.3 percent expect the business situation to deteriorate. About 54.5 percent of the respondents expect the business situation to remain unchanged. This outlook is also reflected in the expected employment figures for the next 3 months. Thus, with a balance of -15 percentage points, a predominantly declining development in the number of employees is expected among the surveyed companies in the printing and media industry.