Leasing: Business climate yields clearly - regeneration of aggregate equipment investment is still down the road

In the German leasing industry, the business climate worsened noticeably in the summer months, which was surprising as it had remained relatively stable in the three preceding quarters. After the strong boost in demand in the first half of 2004, new business decreased sharply in the course of the third quarter, and the comparable previous year-end results were not reached. In light of this development not only the current business situation was assessed less favourably, optimism also weakened with regard to future business. Employment increased in the third quarter by only around ½%. The investment index, based on the outlook appraisals of the leasing companies, which is compiled by the Ifo Institute and the Federation of German Leasing Companies (BDL) and is a reliable indicator for forecasting equipment investment, still gives no indication of an upswing and the index will remain in negative territory up to the beginning of Spring 2005. Accordingly, investments cannot be expected to enter a growth phase until the second quarter of 2005.