Despite the still below average capacity utilisation in manufacturing industry, the ifo investment indicator went up further, as determined together with the Bundesverband Deutscher Leasing-Unternehmen (German Association of Leasing Companies). For the current year this points to an increase in equipment investments of at least six per cent compared with the previous year. One reason: many companies are still using cheap declining balance depreciation, which expires at the end of 2010.

Equipment investments are still around 20 per cent below the pre-crisis level. Although capacity utilisation in manufacturing industry has recovered from 71 per cent at the height of the crisis in the first quarter of 2009 to 82 per cent by the middle of 2010, it is still two percentage points below the long term average and a good five percentage points below the peak before the crisis. Against this background investments in expansion will not be at the forefront.