bvdm economic telegram March 2023: Recovery in business outlook leads to rise in business climate

In March 2023, decision-makers at printing and media companies surveyed by the ifo Institute assessed their current business situation as slightly worse than in the previous month. A significant recovery in expectations regarding business development over the next six months thus more than compensated for the slight decline in the business situation. The values for the business climate therefore increased much more strongly. The characteristics of the current and expected business situation determine the development of the business climate, which is a good leading indicator for the production development of the print and media industry.

The seasonally adjusted business situation index recorded a slight decline of around 1.1 per cent in March compared to the previous month and was thus unable to continue the positive development of the two previous months. The index stood at around 96.4 points and thus remained around 5.2 percent behind the values of the same month last year. About 20 percent of the business leaders surveyed assessed the current business situation in March positively, while about 61 percent were neutral and 19 percent negative. The order situation, which is generally strongly dependent on the economy, continues to be classified as comparatively low due to the economic circumstances. About 45 percent of the respondents recorded an order backlog that was "too low" in March. However, this does not lead to increased short-time work among the enterprises. The share of enterprises with prescribed short-time work was around 12 percent in March. While this represents an increase of 3 percentage points compared to December 2022, it remains around 8 percentage points lower than in the same month last year. The shares of establishments with expected short-time work within 3 months also fell by 12 percentage points compared to December 2022.

The expectations of companies in the printing and media industry regarding the future business situation improved significantly in March 2023. At a seasonally adjusted 97.4 points, the index was around 8.7 per cent above the previous month's level. In a year-on-year comparison, the index of the business outlook for the next 6 months was about 0.9 percent above the values of the same month last year. About 24 percent of the respondents stated that they assess the future business situation as "rather unfavourable", about 64 percent assume that the business situation will remain the same and about 12 percent assess the future business situation as "rather more favourable". A slight improvement is also evident in the expectations for production plans in the next 3 months. About 26 percent of the respondents expect a probable increase in production activity, while 53 percent expect it to remain the same and 21.4 expect it to decrease. On balance, the positive value of around 4 percentage points is thus the highest value recorded since February 2022.