Plant and equipment investment will still boost economic activity in 2008 - movables leasing to expand at a slower pace

In German leasing a clear correction in the confidence indicator occurred in July and August of 2008. The Ifo Business Climate for Leasing worsened in August and fell to its lowest position in five years. This was primarily the result of the firms expressing a very clear pessimism regarding their business expectations. Their appraisals of the current business situation, however, were somewhat more favourable. They are many indications that the currently good situation in leasing will chill perceptibly in the coming months. Also the investment indicator, based on leasing firms' appraisals of the current situation, points to a noticeable slowing in growth in plant and equipment investment by the end of the year. All in all, growth of only a nominal 6 percent is likely. In the two first quarters of 2009, investment in plant and equipment will increase by about 3 percent and will stagnate in the third quarter.