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					Business confidence rises across the globe as growth prospects brighten.

   Increased optimism recorded in worldwide manufacturing and service sectors.
   Growth forecasts upgraded in both developed and emerging economies.
   Strong growth of new business set to drive revenues higher.
   Profits expected to rise at faster pace despite intensifying cost inflation.
   Firms plan stronger increase in output charges.
   Employment set to grow at sharper rate.
   Higher levels of investment planned in both capex and R&D.

The latest KPMG Global Business Outlook Survey signals improved sentiment across the
worldwide economy. Businesses report a rebound in optimism following the drop seen last
autumn, reflecting increased confidence in the global recovery after signs that growth in a
number of countries was flagging in the second half of last year. Upwardly revised projections
for business activity and revenues are broad-based across the majority of the 17 surveyed
countries. Stronger growth forecasts are accompanied by expectations of sharpening price
pressures however, as higher global commodity prices feed through into inflation of both
input costs and output charges.

Economic growth

Faster expansions of output predicted in both the global manufacturing and service sectors

Confidence regarding business activity has improved in both the global manufacturing and
service sectors. Around 61% of manufacturers anticipate a rise in output during the coming
twelve months, against 8% that expect a decline. The resulting net balance is +52.8, up from
+40.8 in the previous survey and the highest since global data were first available in October
2009. In the service sector, the equivalent figure is +46.5 (approximately 55% of firms
forecast growth of activity versus 9% that foresee a reduction), up from +35.8 in October and
the strongest reading in the past four outlook periods.

US companies report strengthened optimism

Firms in the US have signaled an improvement in sentiment since the previous outlook period
and are among the most optimistic globally. Anecdotal evidence suggests that improving
economic conditions and rising client demand have lifted panelists‟ spirits. The net balance of
manufacturers anticipating growth of activity has climbed from +52.8 in October to +64.3,
while the services net balance has risen from +46.0 to +61.6.

Growth seen accelerating in BRIC region

Confidence is also marked in the BRIC area, as highlighted by net balances for activity of
+53.5 in manufacturing and +48.0 in services. Brazil leads the way, with forecasts for output
growth in both sectors the strongest of all 17 monitored countries. Panelists attribute their
optimism to strong domestic demand and increased business opportunities resulting from
preparations for the 2014 football World Cup and 2016 Olympic Games. Indian companies
are also notably upbeat, with confidence the highest since early 2008. Optimism in Russia has
eased slightly in the latest outlook period but remains broadly in line with the global average.
Chinese firms continue to hold expectations for robust output growth, but sentiment is
nevertheless the lowest in the BRIC region. This corresponds with recent action by the
Chinese authorities to control the pace of economic expansion and prevent overheating.

EU companies most upbeat since early 2007

Business confidence in the EU has improved in the latest outlook period. Manufacturers, in
particular, strike a much more optimistic tone than in the previous survey, with a net balance
of +51.7 firms predicting activity growth, up from +39.4 last October and the highest since
January 2007. UK manufacturers are the most upbeat, as a favorable exchange rate boosts
international competitiveness. Confidence is also high among German, Dutch and Austrian
companies, while France and Italy are close to the EU average. Debt crisis-hit Ireland and
Spain both post improved manufacturing optimism, but Greece remains firmly in the mire as
companies continue to predict sharply contracting activity during the coming year.

The EU service sector net balance for activity has edged up to +44.3 from +42.1 last autumn.
Optimism is strongest in Germany – climbing to the highest since data were first available in
April 2006 – with panelists confident that domestic consumer spending growth will stay
robust. Positive sentiment in France and Italy has eased since the previous survey but remains
solid. UK service providers are the most confident regarding activity prospects for almost four
years, despite concerns over the impact of government austerity measures on growth.
Confidence has meanwhile improved modestly in Spain and to a substantial degree in Ireland.

Japan remains laggard despite improvement in growth prospects

Japan remains at the rear of the pack, with optimism weaker than in any other surveyed
country except Greece. Nevertheless, business sentiment has improved in both the
manufacturing and service sectors since last October. A net balance of +35.8 manufacturers
anticipate higher activity in a year‟s time, compared with +15.5 in the previous survey, the
strongest reading since the start of the series in October 2009. The equivalent figure for
services is +13.6, up from -0.7.

Inflation

Price pressures intensify

Rising global commodity prices have driven firms‟ inflation expectations up to the highest
since worldwide data were first available in October 2009. Price increases are forecast to be
strongest in the manufacturing sector, with a net balance of +47.3 firms predicting a rise in
input costs over the coming year. Higher prices are set to be passed on to customers with
increasing frequency, as the net balance for output charges has climbed to +30.7 from +17.8.
The steepest rates of manufacturing sector inflation are forecast in the EU, while the BRIC
area and the US are also set to see marked increases in both costs and charges. Japanese
manufacturers predict a moderate increase in their input prices, but nevertheless expect to
reduce their selling prices slightly amid strong competitive pressures.

Price pressures are also expected to rise in the global service sector, albeit only modestly. The
net balance for input prices has increased to +23.7 from +20.5 in October. Labor costs are
anticipated to be the main factor driving up service providers‟ input prices. The output
charges net balance meanwhile has risen to +15.4 from +10.2. Both input and output prices
are forecast to rise across the BRIC region, EU and US, but Japanese service providers
anticipate broadly flat price trends.

Labor market

Employment growth set to pick up

Optimism regarding employment has increased since last autumn, although forecast rates of
job creation remain well below those for business activity. The net balance for manufacturing
employment has risen to +25.2 from +16.5, while the services figure has climbed to +19.4
from +16.1.

Jobs growth is expected to be strongest in the US and BRIC region (particularly Brazil).
Hiring intentions have risen in the EU, led by service providers in the UK and France and
manufacturers in Germany, the Netherlands and Austria. Spain, however, is set to see a slight
reduction in headcounts across both sectors. Confidence regarding employment growth in
Japan has improved slightly but remains muted.

Investment

Investment plans upgraded in manufacturing sector but scaled back in services

A brighter outlook for growth has encouraged global manufacturers to raise their forecasts for
spending on capital and research & development. In both cases, optimism is the highest in the
five outlook surveys where worldwide data have been available. Service providers continue to
anticipate growth of capex during the year ahead, although confidence has slipped to the
lowest since October 2009.

The BRIC region is set to see the strongest growth of investment over the next twelve months,
whereas EU companies foresee the weakest increases in spending.
USA

Manufacturing Sector

 US manufacturers expect business activity to increase over the next twelve months, with
  the net balance of +64.3 the third-strongest across all monitored countries.
 This reflects firms expecting new orders to grow strongly (+58.6) and capacity utilization
  to improve (+38.4).
 Panelists also predict employment to rise solidly over the course of the year (+37.6).
 Meanwhile, input prices are forecast to increase further, with the net balance of +43.3 the
  highest in the series history. Subsequently, a series-record net balance of US
  manufacturers (+40.7) expect to raise their output prices.
 Firms anticipate business revenues (+61.2) and profits (+56.3) to grow over the next year.
  In both cases, levels of sentiment have risen noticeably since October.
 Reflective of greater profitability, the amount spent on both capital (+22.4) and R&D
  (+24.3) is forecast to increase. Moreover, confidence is markedly stronger than in the
  previous outlook period.
 US manufacturers predict the inventory to output ratio to rise (+12.2).


Comment from panelists:

“We are being creative to help keep costs down”
Food & Drink

“We are opening a new facility that is creating new products”
Transport

“Looking to reduce expenses and diversify our business offerings”
Other Manufacturing

“We have been investing in new equipment to improve efficiency”
Chemicals & Plastics

“Rearranging our workforce to streamline production”
Basic Metals


                             Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity            +54.0 +65.7 +69.3 +52.8 +64.3
Business Revenues            +49.8 +60.7 +67.0 +48.7 +61.2
New Orders                   +55.4 +59.9 +64.8 +47.5 +58.6
Profits                      +46.4 +57.1 +63.7 +43.8 +56.3
Employment                   +20.0 +27.3 +40.4 +24.5 +37.6
Capacity Utilization         +29.0 +32.3 +38.2 +12.1 +38.4
Capital Expenditure          +13.4 +15.4 +28.5 +6.8 +22.4
R&D Expenditure              +16.4 +19.8 +21.3 +7.2 +24.3
Input Prices                 +29.1 +31.6 +33.7 +21.9 +43.3
Output Prices                +27.6 +27.1 +33.3 +19.2 +40.7
Inventory: Output Ratio      +5.7 +5.1 +15.0 +6.8 +12.2
Service Sector

 US service providers anticipate business activity growth over the next twelve months.
  Moreover, US firms are the second-most optimistic across all monitored countries
  (+61.6).
 Increased positive sentiment around both new business and employment is recorded, with
  respective net balances at +55.9 and +23.6.
 Firms also forecast the level of business revenues (+51.0) and profits (+52.5) to grow.
 Survey respondents predict that input prices will rise over the coming year. However, the
  February net balance of +19.8 is a joint-series low. Staff costs are expected to exert the
  greatest inflationary pressure.
 Panelists suggest that greater cost burdens will be offset by raising their prices charged
  (+21.7).
 Capital expenditure is expected to increase, albeit at a weaker pace than predicted in
  October.


Comment from panelists:

“There is potential business beyond our usual processes”
Post & Telecommunication

“We are launching new products”
Renting & Business Activities

“Marketing efforts by our company”
Other Services

“Strong competition is encouraging us to acquire smaller competitors”
Transport & Storage

“Changes in government regulations and taxes”
Renting & Business Activities


                             Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity            +65.6 +60.3 +61.2 +46.0 +61.6
Business Revenues            +64.7 +57.8 +60.7 +43.1 +51.0
New Orders                   +62.8 +57.8 +58.4 +41.4 +55.9
Profits                      +58.7 +55.3 +56.5 +37.9 +52.5
Employment                   +28.4 +28.3 +29.9 +21.3 +23.6
Capital Expenditure          +18.3 +21.1 +17.3 +17.2 +10.3
Outsourcing                  +12.8 +5.9 +9.3 +1.7 +5.3
Input Prices                 +21.6 +19.8 +24.3 +25.9 +19.8
Output Prices                +24.8 +18.1 +19.2 +18.4 +21.7
Staff Costs                  +22.0 +15.2 +19.6 +16.7 +23.6
Services Costs               +17.9 +8.4 +11.2 +7.5 +11.0
Non-Staff Costs              +20.2 +12.2 +17.8 +17.8 +18.3
Japan

Manufacturing Sector

 Manufacturing output in Japan is forecast to rise markedly in the coming year, with the
  net balance improving to a series-record high of +35.8 in February, from +15.5 in
  October.
 Net balances for new work and business revenues also hit survey highs in February,
  recording +33.5 and +25.5 respectively.
 Manufacturing employment is expected to rise in the year ahead. Although only modest,
  the strength of optimism is the strongest since the start of the series in October 2009.
 Japanese manufacturers expect input costs to be higher come February 2012. A net
  balance of +18.5 is a survey-record, but below the global average of +47.3.
 Output price discounting is expected to persist in the coming year, although the rate of
  deflation is forecast to ease, with the net balance improving from -11.2 to -7.8.
 Net balances for capex, capacity utilization and spending on research & development all
  improve to series-record highs in February.


Comment from panelists:

“Upswing in exports will help support growth”
Mechanical Engineering

“Ongoing economic recovery”
Electrical & Optical

“The strength of the yen will restrict activity growth”
Electrical & Optical

“Failure to pass on higher raw material prices to clients”
Chemicals & Plastics

“Competition becoming more severe”
Other


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +26.8 +25.9 +30.8 +15.5 +35.8
Business Revenues             +14.7 +8.0 +14.8 +7.6 +25.5
New Orders                    +30.4 +31.7 +25.1 +19.5 +33.5
Profits                       +21.0 +8.0 +10.9 +1.4 +13.9
Employment                    -8.7 -7.9 -0.5 +5.4 +9.9
Capacity Utilization          +27.5 +27.5 +23.9 +12.9 +29.4
Capital Expenditure           +3.6 +7.2 +11.6 +11.7 +20.8
R&D Expenditure               +14.5 +12.2 +19.4 +12.5 +20.8
Input Prices                  -7.3 -6.5 +9.9 0.0          +18.5
Output Prices                 -25.5 -37.0 -12.1 -11.2 -7.8
Inventory: Output Ratio       -11.6 -20.3 -6.1 -10.3 -7.8
Service Sector

 Japanese service providers expect business activity to rise in the next twelve months, with
  a net balance of +13.6. However, the extent of positive sentiment remains relatively
  muted.
 New business is forecast to be higher come February 2012. Although the strongest in the
  survey history, the degree of optimism is only modest.
 Accordingly, service companies anticipate only slight growth in both business revenues
  (+8.6) and profits (+7.1).
 Job creation is set to quicken, as highlighted by a rise in the employment net balance from
  +2.4 in the previous survey period to +10.4.
 Input costs are forecast to be higher in twelve months‟ time, although the rise is predicted
  to be only fractional. Meanwhile, output charges are expected to fall, with a net balance of
  -3.9.
 Service providers intend to increase spending on capital in the year ahead, albeit at only a
  marginal rate.


Comment from panelists:

“Continued expansion of the wider economy”
Transport & Storage

“Signs of economic recovery in the US”
Financial Intermediation

“Easing of regulations”
Renting & Business Activities

“Rising petroleum prices will curb growth”
Transport & Storage

“Intense competition for new business”
Post & Telecommunications

                             Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity            +10.8 +3.9 +15.6 -0.7 +13.6
Business Revenues            -5.2 -8.7 +6.2 -5.4 +8.6
New Orders                   +2.8 -1.6 -0.3 +6.8 +11.1
Profits                      +5.2 +1.3 +5.2 -1.4 +7.1
Employment                   -1.6 -1.6 +5.2 +2.4 +10.4
Capital Expenditure          +1.2 +3.2 +9.8 +2.7 +7.9
Outsourcing                  0.0    +0.3 +6.5 -4.1 +5.4
Input Prices                 -10.8 -4.9 +5.5 -11.2 +2.9
Output Prices                -12.8 -11.0 -1.3 -14.9 -3.9
Staff Costs                  -4.4 -3.2 +6.5 -3.4 +6.8
Services Costs               -5.6 -8.1 +2.6 -10.2 +5.0
Non-Staff Costs              -7.6 -7.4 +5.9 -0.7 +6.8
Germany

Manufacturing Sector

 Manufacturers in Germany are the most confident about the outlook for business activity
  since January 2007. Around 67% of respondents expect a rise in output, compared with
  just 10% that anticipate a reduction.
 At +56.9 in February, up from +36.6 in October, the net balance is the highest for around
  four years.
 Strong business confidence reflects expectations of further growth in revenues and
  incoming new work in the twelve month ahead.
 Plans to increase operating capacity and product range are highlighted by the strongest
  capex and R&D expenditure intentions since July 2007.
 Company expansion plans have led to robust job creation intentions in February. At
  +26.9, up from +19.4 in October, the net balance is the highest since January 2007.
 Inflation expectations meanwhile continued to intensify in February. Manufacturers
  anticipate the strongest cost inflation since the start of the survey five years ago (just
  exceeding the previous record high seen in July 2008).
 As a result, manufacturers anticipate the strongest factory gate charge inflation since the
  start of the survey in January 2006.

Comment from panelists:

“Higher sales for new-energy products and green-energy products”
Electrical & Optical

“Concentrating on core competencies and trying new strategies and solutions”
Basic Metals

“Internal restructuring will release additional capacities”
Mechanical Engineering

“Higher utilization due to forthcoming major infrastructure projects”
Other Manufacturing

“Increasing prices for agricultural outputs due to low harvests, long delivery times”
Food & Drink

                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +33.9 +46.1 +50.2 +36.6 +56.9
Business Revenues              +30.4 +42.9 +50.7 +42.4 +61.6
New Orders                     +32.1 +43.3 +54.4 +37.7 +57.4
Profits                        +8.5 +15.7 +23.8 +16.8 +24.1
Employment                     -14.3 +6.9 +17.4 +19.4 +26.9
Capacity Utilization           +24.1 +39.6 +44.9 +30.5 +51.9
Capital Expenditure            -15.2 -5.1 +9.7 +15.7 +18.1
R&D Expenditure                -4.0 -7.4 +4.8 +12.0 +16.7
Input Prices                   +7.6 +33.3 +60.4 +60.0 +76.9
Output Prices                  -12.6 -2.8 +22.2 +23.2 +43.1
Inventory: Output Ratio        -22.8 -21.2 -8.7 -14.7 -10.6
Service Sector

 Confidence in the German service sector about the outlook for business activity in twelve
  months‟ time has reached its highest level since the start of the survey in April 2006.
 Around 62% of survey respondents anticipate a rise in business activity, compared with
  just 13% that expect a decline. As a result, the net balance has increased to +48.3 in
  February from +41.7 in October.
 Expectations for business revenues and incoming new work have also improved.
 Service providers on balance expect a rise in employment levels in the next twelve
  months. However, the degree of positive sentiment eased from last October‟s recent high.
 The net balance of firms expecting a rise in input costs has climbed from +36.5 to +44.8.
  The latest reading is the highest since April 2008.
 Firms on balance expect their charges to rise in the next twelve months. However, at +5.6
  in February, the index measuring output charge intentions is only slightly higher than the
  +5.1 seen in the previous survey.
 Survey respondents remain upbeat about the outlook for profits over the year ahead. At
  +22.0 in February, the net balance is little-changed from +22.1 in October.

Comment from panelists:

“New structure of company, increased willingness to invest”
Renting& Business Activities

“Positive development in private consumption, private investment more attractive”
Other Services

“Competition in the industry is fierce”
Renting & Business Activities

“Price increase too strong, pressure of unions cause higher staff costs”
Hotels & Restaurants

“Inflation risks”
Financial Intermediation

                       Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity      +23.6 +27.3 +25.3 +41.7 +48.3
Business Revenues      +14.1 +20.9 +25.4 +41.0 +46.1
New Orders             +16.9 +22.4 +22.8 +31.2 +38.4
Profits                -6.0 +6.1 +8.6 +22.1 +22.0
Employment             -1.6 +2.0 +3.4 +17.4 +13.4
Capital Expenditure    -10.0 -7.8 -5.6 +2.3 -2.6
Outsourcing            -16.9 -17.6 -18.1 -13.8 -22.8
Input Prices           +16.9 +15.1 +21.9 +36.5 +44.8
Output Prices          -17.7 -14.4 -7.3 +5.1 +5.6
Staff Costs            +20.2 +22.1 +29.2 +43.3 +44.4
Service Costs          -7.3 -3.7 -0.9 +8.4 +16.4
Non-Staff Costs        -11.2 -0.4 -6.4 +7.3 +9.5
UK

Manufacturing Sector

 UK manufacturers are optimistic that activity will increase over the next year, with the
  degree of positive sentiment the strongest since data collection began in January 2006. A
  net balance of +60.4 firms anticipate a rise in output, up from +48.5 in October.
 Expected growth of new business is set to support the rise in activity. In turn, revenues are
  forecast to increase markedly and at the strongest rate predicted in the survey history.
 Inflationary pressures are set to intensify for UK manufacturers, with input costs projected
  to rise considerably. Panelists expect to be able to pass on a substantial part of their higher
  costs to customers, with output prices forecast to increase markedly. Both costs and
  charges are predicted to rise at the fastest rates in their respective series histories.
 Reflective of higher revenues and an expected ability to pass on a large part of their cost
  increases, profits are expected to increase solidly. However, the projected rise in profits
  remains weaker than that of revenues.
 The sharp rise in activity is set to increase capacity utilization. Employment is also
  forecast to increase, but at the weakest rate predicted in four survey periods.
 Expenditure on both capex and R&D is expected to rise modestly.


Comment from panelists:

“R&D investment over the past three years looking likely to pay off”
Electrical & Optical

“Cost of freight reducing differentials with Far East production”
Chemicals & Plastics

“MoD consolidating existing contracts”
Transport

“New products, expanding markets in countries such as India and China”
Mechanical Engineering

“Consolidation of market as weaker competitors drop out”
Timber & Paper

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +50.4 +57.9 +56.2 +48.5 +60.4
Business Revenues             +46.4 +50.6 +47.4 +41.7 +52.6
New Orders                    +51.0 +62.1 +56.5 +49.2 +59.1
Profits                       +37.0 +48.5 +38.2 +31.4 +37.2
Employment                    +7.7 +20.6 +25.8 +23.3 +19.8
Capacity Utilization          +42.1 +52.1 +46.1 +40.1 +45.2
Capital Expenditure           +5.4 +14.4 +8.5 +12.6 +18.9
R&D Expenditure               +10.0 +16.6 +11.1 +15.5 +16.4
Input Prices                  +33.6 +46.3 +49.7 +52.8 +67.8
Output Prices                 +30.2 +41.2 +43.5 +40.8 +54.2
Inventory: Output Ratio       -19.4 -13.4 -8.5 -12.0 -11.8
Service Sector

 Business activity in the UK service sector is expected to rise solidly over the next twelve
  months, as signaled by a net balance of +44.8, the strongest reading in the past nine
  survey periods.
 Higher activity is set to be supported by further marked growth in new work intakes.
 Subsequently, employment is forecast to increase, and at the fastest pace predicted since
  April 2007. Meanwhile, service companies anticipate only a marginal rise in outsourced
  work.
 Input prices are projected to increase markedly, and at the strongest rate since data
  collection began in April 2006. Staff costs are set to be the fastest growing element.
 Expectations for output prices are the highest in eight survey periods, and above the EU
  and global averages.
 UK service companies plan marginal growth of capital expenditure in the next twelve
  months.

Comment from panelists:

“Emerging economies seeking to do business in UK”
Financial Intermediation

“Bank requiring much tighter credit facilities so affecting cash”
Hotels & Restaurants

“Competition failures opening up new opportunities”
Transport & Storage

“Downward pressure on prices we can charge against upward pressure on our costs, in
particular staff costs”
Post & Telecommunication

“Public sector outsourcing services to third sector organizations”
Renting & Business Activities


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +38.6 +38.5 +29.2 +40.6 +44.8
Business Revenues             +31.0 +32.3 +24.1 +33.2 +35.6
New Orders                    +32.9 +39.4 +29.8 +36.6 +45.0
Profits                       +23.8 +31.1 +18.6 +26.5 +26.8
Employment                    +9.1 +9.2 +7.8 +15.1 +23.2
Capital Expenditure           +0.3 +2.8 -0.7 +4.5 +6.6
Outsourcing                   +0.6 +2.8 -2.0 +4.8 +7.2
Input Prices                  +35.4 +40.6 +39.0 +44.0 +55.5
Output Prices                 +21.3 +21.2 +18.0 +22.0 +26.5
Staff Costs                   +33.9 +36.3 +34.9 +45.6 +48.9
Services Costs                +12.2 +18.5 +18.0 +20.4 +28.5
Non-Staff Costs               +25.4 +26.8 +25.4 +24.4 +36.7
France

Manufacturing Sector

 Confidence in the French manufacturing sector has improved since the previous outlook
  survey. A net balance of +47.0 companies forecast an increase in business activity during
  the next twelve months, the highest since data were first available in January 2006.
 Higher output is set to be underpinned by a marked expansion of incoming new business.
  February‟s net balance of +45.0 is the strongest recorded to date. Consequently,
  expectations regarding business revenues are the highest in the survey history (+37.7).
 Expectations regarding input cost inflation have also risen to a series-record high (+73.5).
 Correspondingly, firms are set to raise their selling prices at a stronger pace. The net
  balance for output charges has risen to +44.4 from +27.9 in October.
 Employment intentions are the highest since July 2007, with a net balance of +11.3 firms
  planning to add extra staff.
 The net balance for capacity utilization has climbed to a series-record high of +45.7.
 Expectations regarding capital expenditure remain positive but have slipped slightly since
  October.
 R&D spending is set to rise at a faster pace, with February‟s net balance of +24.5 a record
  high.

Comment from panelists:

“General global rebound”
Chemicals & Plastics

“Getting out of the economic crisis”
Transport

“Strength in export markets”
Food & Drink

“More investment in employment and materials”
Electrical & Optical

“Shortage of raw materials”
Chemicals & Plastics

                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +21.6 +32.7 +34.8 +36.0 +47.0
Business Revenues              +10.9 +11.0 +27.2 +30.8 +37.7
New Orders                     +26.6 +33.1 +39.0 +31.4 +45.0
Profits                        +7.9 +13.2 +20.5 +23.8 +22.5
Employment                     -18.7 -6.9 -1.8 +1.7 +11.3
Capacity Utilization           +17.8 +30.1 +34.2 +29.7 +45.7
Capital Expenditure            -7.2 +3.2 +11.2 +19.2 +18.5
R&D Expenditure                +6.1 +5.7 +5.0 +17.4 +24.5
Input Prices                   +28.9 +28.3 +57.3 +52.3 +73.5
Output Prices                  -2.1 -4.5 +22.0 +27.9 +44.4
Inventory: Output Ratio        -16.2 -16.4 -12.9 -10.5 -14.6
Service Sector

 Although February‟s net balance for activity has slipped slightly to the lowest of the past
  five outlook periods (+46.4), it remains above the EU average and stronger than the
  survey‟s long-run trend.
 Confidence regarding both revenues and new business has improved since the previous
  outlook survey.
 French service providers expect to raise employment at the fastest pace since October
  2007.
 Capex plans have been revised up slightly. February‟s net balance of +18.8 is the highest
  of the past eight outlook surveys.
 Input cost expectations are the strongest for almost three years (+33.8).
 The main source of inflationary pressure is forecast to be staff salaries, although
  outsourcing and other non-staff costs are also set to rise.
 The net balance for output charges has increased to +30.0, the highest since April 2008.


Comment from panelists:

“Strengthening economic recovery”
Transport & Storage

“Development of web activity and global business”
Renting & Business Activities

“Maintained growth in Europe and globally, increased confidence”
Other Services

“Unrest in Northern Africa causing uncertainty”
Renting & Business Activities

“Prices of raw materials going up, which affects key projects”
Renting & Business Activities


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +47.9 +52.4 +47.3 +47.0 +46.4
Business Revenues             +33.9 +39.0 +43.4 +35.2 +42.0
New Orders                    +48.7 +52.8 +50.0 +43.8 +45.4
Profits                       +29.6 +32.2 +35.9 +32.4 +33.8
Employment                    +7.6 +7.4 +18.5 +21.5 +25.1
Capital Expenditure           0.0    +5.9 +16.3 +18.3 +18.8
Outsourcing                   +7.0 +5.1 +10.9 +5.9 +9.7
Input Prices                  +30.0 +25.7 +32.9 +25.6 +33.8
Output Prices                 +8.5 +9.2 +22.2 +19.6 +30.0
Staff Costs                   +32.8 +39.0 +31.4 +34.7 +37.2
Service Costs                 +18.1 +12.0 +15.4 +12.8 +15.0
Non-Staff Costs               +15.4 +6.8 +14.3 +17.8 +22.2
Italy

Manufacturing Sector

 Italian manufacturing companies are confident that activity at their plants will be higher in
  one year‟s time than at present. Moreover, a net balance of +51.1 in February is the
  highest since January 2007.
 Growth in output is set to be driven by a strong expansion of new business levels. A net
  balance of +50.0 companies forecast growth of new orders – the highest since data were
  first collected in January 2006.
 Higher output and new order expectations mean that business revenues and profits are
  forecast to rise at the fastest pace in the history of the survey.
 At +16.5, from +5.3, the net balance for employment signals the strongest hiring
  intentions for the year ahead since data were first available in January 2006. The pace of
  increase is, however, set to be below the EU average.
 Inflation expectations in the Italian manufacturing sector hit a survey-high during
  February, with both input and output prices set to rise markedly.
 Capex and R&D spending plans have been upwardly revised since October 2010. In both
  cases, however, investment plans are lower than seen prior to the financial crisis.


Comment from panelists:

“Increased interest from abroad towards our products”
Food & Drink

“Our target for the year is to enter new markets”
Textiles & Clothing

“Big recovery of domestic market”
Timber & Paper

“Better political situation will give companies hope about the future”
Basic Metals

“Ongoing difficulties to find raw materials”
Mechanical Engineering

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +43.5 +48.9 +46.5 +47.1 +51.1
Business Revenues             +30.6 +37.6 +39.3 +41.2 +47.3
New Orders                    +41.3 +49.7 +45.4 +48.2 +50.0
Profits                       +11.8 +17.4 +14.4 +26.5 +32.4
Employment                    -14.8 -3.8 -2.8 +5.3 +16.5
Capacity Utilization          +33.3 +36.8 +34.3 +37.6 +43.1
Capital Expenditure           +3.3 +9.2 +15.6 +12.9 +19.7
R&D Expenditure               +6.1 +11.5 +18.6 +21.8 +28.7
Input Prices                  +38.8 +52.2 +53.5 +49.4 +66.5
Output Prices                 +8.2 +19.5 +39.4 +35.3 +48.9
Inventory: Output Ratio       -10.9 -6.5 -12.0 -1.8 -8.5
Italy

Service Sector

 Italian service providers maintain a positive outlook for activity at their business units in
  one year‟s time. A net balance of +44.5, however, indicates that sentiment is lower than
  recorded last October (+50.8).
 New order levels are also forecast to be higher in twelve months‟ time, but the degree of
  optimism has deteriorated slightly since the previous survey period.
 Resultantly, business revenues and profits are both expected to rise at weaker rates than
  forecast in October 2010.
 Despite downgrading forecasts for activity and new business growth, Italian service
  providers have raised their employment plans. A net balance of +11.0 in February is the
  highest since October 2009.
 A net balance of +19.9 Italian service providers expect to see input costs rise over the
  coming year. This marks an increase since last October, but is below the long-run series
  average (+34.6).
 Staffing, outsourcing and other non-staff costs are all set to rise, with the steepest rate of
  inflation forecast for wage costs.

Comment from panelists:

“Better economic conditions in Europe and rest of the world”
Transport & Storage

“Government stability and recovery of optimism”
Renting & Business Activities

“The development of new business areas”
Financial Intermediation

“Entrance of foreign competitors that can afford to make more investments”
Renting & Business Activities

“Increase of raw material costs”
Post & Telecommunications

                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +50.5 +45.1 +42.4 +50.8 +44.5
Business Revenues              +41.7 +37.7 +36.0 +45.7 +39.8
New Orders                     +49.2 +40.3 +39.3 +46.7 +42.9
Profits                        +31.8 +25.1 +28.4 +38.2 +31.4
Employment                     +11.4 +5.2 +6.9 +5.5 +11.0
Capital Expenditure            +6.6 +7.6 +9.5 +6.0 +4.7
Outsourcing                    +12.6 +3.3 +6.0 +9.0 +7.9
Input Prices                   +20.9 +20.2 +28.4 +17.1 +19.9
Output Prices                  +3.9 +6.3 +6.5 +10.1 +16.2
Staff Costs                    +28.7 +25.6 +21.9 +26.6 +25.1
Service Costs                  +12.9 +6.8 +9.9 +8.0 +9.4
Non-Staff Costs                +4.5 +5.8 +12.3 +8.5 +5.8
Spain

Manufacturing Sector

 Spanish manufacturing firms expect activity to increase over the next twelve months, with
  the business activity net balance posting +36.0 in February. Moreover, the level of
  optimism has improved to the strongest in three survey periods.
 New orders and business revenues are also forecast to rise during the coming year, with
  sentiment improving in both cases. Moreover, optimism regarding revenues is the
  strongest since July 2007.
 Despite rising workloads, manufacturers are still expecting employment to fall slightly.
  Job cuts have been forecast in each of the past nine outlook surveys, although the level of
  negativity in February is the weakest in this period.
 Input prices are predicted to rise sharply over the next twelve months, with expectations at
  their strongest in seven survey periods and only marginally weaker than the series record.
  The rate of output price inflation is expected to be slower than for input costs. However,
  the net balance of +29.1 is the highest since July 2008.
 Strong input cost inflation is forecast to constrain profits. Although remaining in positive
  territory, the profitability net balance signals only a slight increase over the coming year.


Comment from panelists:

“We have recently restructured the company to work with the foreign market”
Mechanical Engineering

“Improved quality and productivity”
Transport

“Significant raw material price increase in a market not yet recovered”
Transport

“Lack of consumption, excessive competition and lack of market demand”
Timber & Paper

“Higher competitiveness in the sector”
Basic Metals

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +33.0 +36.3 +27.4 +26.8 +36.0
Business Revenues             +23.2 +24.8 +25.8 +21.9 +30.8
New Orders                    +31.7 +40.2 +24.2 +18.6 +34.3
Profits                       +2.3 +13.9 +7.2 +7.7 +8.7
Employment                    -17.0 -10.0 -11.6 -4.4 -1.2
Capacity Utilization          +16.6 +26.2 +20.8 +19.1 +30.8
Capital Expenditure           +0.9 +6.1 +12.1 +1.6 +15.1
R&D Expenditure               +8.2 +6.1 +2.5 -2.2 +8.1
Input Prices                  +17.0 +31.2 +41.4 +35.5 +62.2
Output Prices                 0.0    +2.8 +6.6 +15.8 +29.1
Inventory: Output Ratio       -24.1 -14.9 -16.2 -21.9 -21.5
Service Sector

 Services companies in Spain continue to predict rising activity over the next twelve
  months, with the net balance of +26.5 slightly higher than that seen in October 2010.
 Optimism is also recorded regarding new business levels. February‟s is the sixth
  successive positive forecast and the strongest for a year.
 Consistent with the trend in manufacturing, Spanish service providers are expecting to cut
  employment further over the coming year. The net balance of -4.8 is only slightly in
  negative territory, but is still the eighth successive prediction of a reduction in staffing
  levels.
 Input costs are set to increase at the fastest pace predicted since October 2008. Staff costs
  are expected to be the main driver of inflation, whereas non-staff costs are predicted to
  fall.
 Output prices are forecast to rise only slightly in response, but the net balance of +4.8 is
  the first positive reading in six outlook surveys.
 Service providers predict a further reduction in profits over the next twelve months, with
  the net balance of -8.8 little-changed from the position in October 2010.


Comment from panelists:

“Opening new markets and relationship with customers in emerging markets”
Renting & Business Activities

“Greater control over costs and better organization”
Transport & Storage

“Higher raw material and salary costs”
Hotels & Restaurants

“Weak demand and Spanish economic situation”
Renting & Business Activities

“Higher labor and fuel costs”
Transport & Storage


                                Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity               +33.0 +39.3 +20.8 +24.7 +26.5
Business Revenues               +26.8 +19.7 +2.5 +16.4 +17.0
New Orders                      +27.4 +31.2 +16.8 +23.3 +25.9
Profits                         -5.5 -11.1 -15.0 -8.9 -8.8
Employment                      -5.3 -6.3 -8.3 -2.1 -4.8
Capital Expenditure             -10.2 -9.4 -15.2 -17.1 -2.7
Outsourcing                     -8.0 -4.2 -8.1 -2.7 +2.0
Input Prices                    +5.0 +14.2 +13.5 +8.9 +21.8
Output Prices                   -5.9 -8.4 -4.2 0.0          +4.8
Staff Costs                     +18.2 +20.5 +10.8 +17.1 +25.9
Service Costs                   -6.5 -3.2 -1.2 -3.4 +10.9
Non-Staff Costs                 -10.3 +2.6 -4.2 -12.3 -3.4
Ireland

Manufacturing Sector

 Strong optimism is recorded in the Irish manufacturing sector again in February. The
  activity net balance has risen to +42.9, the sixth successive survey period in which
  positive expectations have been signaled.
 Both revenues and new orders are forecast to increase over the coming year. Moreover,
  the respective net balances have improved to the highest in nine and ten survey periods.
 Strengthening workloads are predicted to lead to a rise in profits during the next twelve
  months. After posting negativity in the previous outlook survey, Irish manufacturers are at
  their most optimistic since January 2007.
 Firms predict an increase in employment for the third survey running. Although the net
  balance of +9.3 is only modestly in positive territory, it is the highest in the current
  sequence of optimism.
 Input cost inflation is forecast to be the strongest since January 2007. Output prices are
  also predicted to rise, in contrast to broadly flat expectations in the previous survey.
 The net balance regarding R&D expenditure has increased to +11.4, the highest in nine
  outlook surveys.


Comment from panelists:

“Significant international sales pipeline”
Electrical & Optical

“Export market is the only chance of increasing sales”
Basic Metals

“Higher exports to UK”
Chemicals & Plastics

“Price of raw materials going up every month”
Textiles & Clothing

“Competition from abroad”
Basic Metals

                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +31.8 +38.0 +45.2 +32.8 +42.9
Business Revenues              +15.6 +26.3 +30.2 +18.4 +37.9
New Orders                     +33.1 +34.3 +38.9 +33.6 +40.0
Profits                        +14.3 +12.4 +21.4 -2.4 +22.9
Employment                     -17.5 -9.5 +2.4 +2.4 +9.3
Capacity Utilization           +21.4 +24.8 +28.6 +21.6 +34.3
Capital Expenditure            -18.2 -10.9 +6.3 -2.4 +2.1
R&D Expenditure                -5.8 +2.2 +7.9 +1.6 +11.4
Input Prices                   -4.5 +0.7 +30.2 +36.0 +46.4
Output Prices                  -15.6 -16.1 +4.8 -0.8 +17.1
Inventory: Output Ratio        -25.3 -12.4 -9.5 -14.4 -17.1
Service Sector

 Expectations regarding business activity in the Irish service sector have improved since
  the previous outlook survey. The net balance of +40.8 is the fifth successive instance of
  positivity.
 New business is also forecast to rise over the coming year. Moreover, at +37.2 the net
  balance is up strongly from the reading seen in October. Profits are predicted to increase
  for the fifth outlook survey in a row, with sentiment in February stronger than in the
  previous outlook period.
 Irish service providers are expecting to take on extra staff over the next twelve months.
  Although the net balance of +10.8 points to only modest growth, it is an improvement on
  the previous survey.
 Input cost inflation in the service sector is set to remain muted over the coming year. The
  net balance of +13.6 is well below that registered at manufacturing firms. Despite
  forecasting a rise in input prices, companies are expecting to cut their charges. Output
  prices have now been predicted to fall in each of the past seven outlook surveys.
 The amount of work outsourced by service providers is forecast to increase for the first
  time in three outlook surveys.

Comment from panelists:

“Restructure to slicker, more efficient model”
Financial Intermediation

“Low price base may open up opportunities in market as potential clients seek to reduce
costs”
Renting & Business Activities

“More competitive on price”
Renting & Business Activities

“Competition – race to the bottom on pricing”
Renting & Business Activities

“Biggest threat is lack of credit from banks and lack of confidence with consumer to spend”
Other Services

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +27.3 +35.2 +47.9 +22.4 +40.8
Business Revenues             +4.4 +17.3 +32.4 +9.0 +24.4
New Orders                    +21.3 +33.1 +48.3 +18.4 +37.2
Profits                       +2.0 +11.5 +26.5 +2.4 +18.0
Employment                    -5.6 +6.3 +16.8 +5.9 +10.8
Capital Expenditure           -17.5 -15.4 -7.6 -16.9 -6.8
Outsourcing                   -2.4 +6.7 0.0        -3.1 +4.4
Input Prices                  -10.6 -11.0 +6.3 +1.6 +13.6
Output Prices                 -22.6 -16.7 -4.6 -10.6 -8.8
Staff Costs                   -13.1 -7.9 +4.2 +1.6 +8.0
Service Costs                 -26.7 -12.0 -11.8 -5.1 -3.2
Non-Staff Costs               -21.7 -19.3 -10.1 -7.8 -3.6
Austria

Manufacturing Sector

 Austrian manufacturers‟ sentiment regarding the outlook for activity has improved for the
  second survey running. Furthermore, the net balance of +53.4 is the highest since January
  2007.
 Firms predict expansions of both new business and revenues over the coming year, with
  net balances reaching the highest levels in ten survey periods in both cases.
 However, optimism around profits remains muted, with the net balance posting +12.9 as
  input costs are forecast to rise sharply. Austrian manufacturers foresee steep input price
  inflation, with the net balance of +77.6 the strongest seen in any outlook survey to date.
 Output prices are also set to increase, but to a lesser extent than input costs. That said, the
  net balance has risen for the fifth survey period running to the joint-highest in the series
  history.
 Austrian manufacturers expect to raise employment over the coming year. Positive
  forecasts have now been recorded in each of the past three survey periods, and the latest
  optimism is the strongest since July 2007.
 Firms foresee further growth in spending on both R&D and capital.

Comment from panelists:

“Higher presence in international markets”
Basic Metals

“Projects delayed during crisis are now being realized”
Chemicals & Plastics

“Introduction of new products”
Food & Drink

“Higher raw material and energy prices”
Food & Drink

“Strong competition and delivery problems”
Electrical & Optical


                               Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +39.0 +37.1 +44.7 +53.4
Business Revenues              +30.3 +34.8 +41.2 +55.2
New Orders                     +35.0 +35.3 +38.6 +52.6
Profits                        -5.7 +10.4 +12.2 +12.9
Employment                     0.0    +21.6 +19.8 +30.2
Capacity Utilization           +23.6 +28.7 +30.5 +43.1
Capital Expenditure            -13.8 -6.9 +10.0 +14.7
R&D Expenditure                -4.1 +4.3 +6.9 +13.8
Input Prices                   +30.9 +57.8 +46.2 +77.6
Output Prices                  -8.9 +11.3 +22.7 +32.8
Inventory: Output Ratio        -17.9 -16.4 -20.5 -8.6
Netherlands

Manufacturing Sector

 Firms in the Netherlands manufacturing sector are optimistic over future business
  conditions. Respondents expect expansions in both output (+54.6) and new orders (+63.8),
  with confidence in both cases the strongest since January 2008.
 Subsequently, business revenues and profitability are also expected to rise, with net
  balances of +59.2 and +34.7 respectively.
 Reflective of expected profitability growth, firms are set to increase expenditure on both
  capital (+30.1) and R&D (+33.7). The net balance for the latter is at a series-high.
 Employment is forecast to increase. The net balance of firms planning to raise headcounts
  (+30.6) is the highest since July 2007.
 Dutch manufacturers anticipate a higher rate of input price inflation than was predicted in
  October, with expectations the strongest in seven outlook periods (+75.5). Output prices
  are also forecast to increase (+43.4), but at a slower rate than input costs.
 Capacity utilization is predicted to rise, with the net balance (+52.6) the highest across the
  EU. Meanwhile, the inventory to output ratio is expected to fall further (-6.6).


Comment from panelists:

“The economy is improving; therefore there is more money available to invest”
Chemicals & Plastics

“Higher energy prices are making energy-saving products more attractive”
Electrical & Optical

“New innovative products that are aimed at different market segments”
Transport

“Better market conditions in the US and Asia”
Mechanical Engineering

“Doing more global business to increase turnover”
Other Manufacturing


                              Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +35.0 +45.7 +41.7 +54.6
Business Revenues             +35.8 +49.2 +43.5 +59.2
New Orders                    +41.7 +54.3 +43.1 +63.8
Profits                       +24.5 +33.5 +18.1 +34.7
Employment                    -1.2 +19.0 +13.9 +30.6
Capacity Utilization          +36.4 +44.7 +39.4 +52.6
Capital Expenditure           -1.2 +10.2 +9.7 +30.1
R&D Expenditure               +11.0 +19.8 +20.4 +33.7
Input Prices                  +34.0 +54.3 +51.4 +75.5
Output Prices                 0.0    +19.8 +22.7 +43.4
Inventory: Output Ratio       -11.7 -7.4 -8.3 -6.6
Greece

Manufacturing Sector

 Pessimism remained widespread amongst Greek manufacturers in February, with
  respective net balances of -29.3, -35.7, -30.7 and -45.7 registered for output, new orders,
  revenues and profits. These latest readings signal expectations of marked contractions in
  all four variables over the next year.
 The rate of capacity utilization is projected to dip moderately as a result.
 Reflecting poor expectations for revenues and profits, Greek manufacturers plan to make
  further cuts to staffing levels and also expenditure on both new capital and R&D.
 Prices charged for Greek manufactures are set to fall, but only slightly and at a milder rate
  than anticipated last October, as shown by a rise in the net balance from -8.0 to -2.9.
 Meanwhile, input price inflation is predicted to remain robust.


Comment from panelists:

“Strong competition is a key threat to business”
Food & Drink

“Liquidity problems combined with rising raw material prices will make things difficult”
Textiles & Clothing

“Poor economic conditions will subdue demand”
Electrical & Optical

“Unemployment, government austerity measures, lower turnover and possible protests will
damage business”
Chemicals & Plastics

“Market uncertainty and ongoing recession will make things difficult”
Timber & Paper



                              Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             -25.2 -43.0 -29.6 -29.3
Business Revenues             -33.3 -44.0 -33.6 -30.7
New Orders                    -24.3 -44.2 -29.6 -35.7
Profits                       -37.2 -53.9 -45.5 -45.7
Employment                    -24.1 -45.7 -33.3 -36.4
Capacity Utilization          -11.2 -10.2 -9.8 -12.1
Capital Expenditure           -17.2 -20.3 -21.4 -13.6
R&D Expenditure               -7.9 -29.6 -17.0 -27.9
Input Prices                  +12.2 +29.5 +39.1 +40.7
Output Prices                 -19.0 -17.1 -8.0 -2.9
Inventory: Output Ratio       -22.6 -14.1 -26.3 -21.4
Czech Republic

Manufacturing Sector

 Czech manufacturers are strongly confident regarding the twelve-month outlook for
  business activity at the start of 2011. The net balance is at its highest in two-and-a-half
  years, at +42.8. However, the latest figure is one of the lowest registered worldwide,
  beating only Greece, Spain and Japan.
 The net balances for new business and revenues both remain positive (+50.9, +19.5), and
  are greater than their respective long-run averages (since January 2006).
 Profits are set to increase, as the net balance is positive (+15.1) for only the second time in
  the past eight survey periods. It is at its highest level since July 2007.
 The anticipated rise in profits across the sector comes despite expected further growth in
  cost pressures. The net balance for input prices is at its highest since July 2008 (+61.6).
 Czech manufacturing employment looks set to rise at its fastest rate in two-and-a-half
  years in 2011. The net balance improves to +20.1, the best outcome since January 2008.
 Net balances for capacity utilization, capital expenditure and research & development
  spending are all positive in the latest outlook period (+38.4, +21.4, +15.1).

Comment from panelists:

“Gaining a stronger position in the Western European market”
Chemicals & Plastics

“New projects for the auto industry”
Mechanical Engineering

“Upgrading machinery and expanding production premises”
Timber & Paper

“Inflation, increasing raw material prices, strengthening of the CZK, slump in global
consumption”
Mechanical Engineering

“Keeping or increasing domestic position”
Chemicals & Plastics


                              Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +8.9 +28.7 +41.7 +42.8
Business Revenues             -2.5 +21.1 +16.7 +19.5
New Orders                    +22.0 +39.2 +38.5 +50.9
Profits                       -3.2 +5.8 0.0        +15.1
Employment                    -7.5 +9.4 +8.3 +20.1
Capacity Utilization          +13.9 +39.2 +35.4 +38.4
Capital Expenditure           0.0    +7.6 +18.8 +21.4
R&D Expenditure               -3.2 +1.2 +5.2 +15.1
Input Prices                  +16.3 +49.1 +58.3 +61.6
Output Prices                 -6.3 +17.0 +13.5 +29.6
Inventory: Output Ratio       -14.4 -11.1 -4.2 -1.9
Poland

Manufacturing Sector

 The twelve-month outlook for business activity in the Polish manufacturing sector
  remains strongly positive. The net balance has eased to +50.6, from +53.2 in October, but
  is still higher than in any other period since July 2007.
 The net balance for new business has improved marginally to +44.7, the highest since
  January 2008.
 The outlook for revenues, though positive overall, has eased since the previous outlook
  period (+35.3 from +40.3). This reflects weaker expected increases in output prices, as the
  net balance dips to +34.1, from +39.0 in October.
 A combination of increased competitive pressure and faster input price inflation is
  projected to result in weaker gains in profits over the next twelve months. The input prices
  net balance rises to +62.4, while the profits figure has eased to +17.6.
 Polish manufacturers remain positive regarding their expectations for workforces. The
  employment net balance is at +16.5, the second-highest since July 2007.
 Net balances for capacity utilization, capital expenditure and research & development
  spending all remain positive in the latest outlook period (+38.8, +27.1, +18.8).

Comment from panelists:

“Exporting to key Western European markets and USA”
Basic Metals

“Utilising EU funds that drive regional investment”
Electrical & Optical

“Winning new customers through new products and initiatives”
Textiles & Clothing

“Unfair competition from China”
Basic Metals

“Inflation of oil-related raw materials, uncertain global geopolitical situation”
Chemicals & Plastics

                               Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +42.1 +46.5 +53.2 +50.6
Business Revenues              +26.3 +36.6 +40.3 +35.3
New Orders                     +36.8 +42.3 +44.2 +44.7
Profits                        +19.7 +26.8 +26.0 +17.6
Employment                     +2.6 +18.3 +11.7 +16.5
Capacity Utilization           +36.8 +40.8 +45.5 +38.8
Capital Expenditure            +9.2 +23.9 +11.7 +27.1
R&D Expenditure                +14.5 +26.8 +16.9 +18.8
Input Prices                   +23.7 +49.3 +50.6 +62.4
Output Prices                  +9.2 +26.8 +39.0 +34.1
Inventory: Output Ratio        -9.2 0.0      -18.2 0.0
Brazil

Manufacturing Sector

 The outlook for Brazil‟s manufacturing industry has improved noticeably since the
  previous survey, with sharper expansions expected across all key variables.
 Net balances for activity (+73.9), new orders (+75.5) and revenues (+74.9) have climbed
  to their highest levels since last June, and are the strongest of all seventeen countries
  monitored.
 Consequently, firms anticipate that profits will increase markedly in the next year.
 Predictions of larger gains in new business and higher output in the year ahead are
  reflected in estimations for capacity utilization in February. A net balance of +70.9 firms
  believe that capacity utilization will increase, up from +39.8 in the previous survey period.
 Manufacturers intend to raise employment over the coming twelve months. The expansion
  in staffing levels is set to be strong.
 Firms plan to increase spending on both capital and R&D.
 However, price pressures are also predicted to intensify. Inflation rates of both input and
  output prices are on course to accelerate, as highlighted by respective net balances of
  +70.5 and +70.2, up from +30.8 and +29.8 in October.


Comment from panelists:

“Improved harvest will boost exports”
 Food & Drink

“Increased government investment in domestic infrastructure will reduce transport costs and
increase new business”
Basic Metals

“We will be needed for civil engineering works in preparations for the World Cup and
Olympics”
Mechanical Engineering


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +84.6 +84.2 +77.1 +42.7 +73.9
Business Revenues             +82.8 +82.9 +75.8 +39.8 +74.9
New Orders                    +83.3 +85.3 +76.0 +41.2 +75.5
Profits                       +77.0 +80.1 +70.1 +34.4 +74.1
Employment                    +69.1 +76.8 +70.2 +34.6 +71.2
Capacity Utilization          +73.9 +81.4 +70.2 +38.9 +70.9
Capital Expenditure           +65.7 +72.9 +66.0 +33.5 +67.4
R&D Expenditure               +55.9 +72.2 +67.2 +33.6 +66.9
Input Prices                  +61.8 +73.4 +70.5 +30.8 +70.5
Output Prices                 +58.9 +73.4 +67.2 +29.8 +70.2
Inventory:Output Ratio        +52.7 +63.6 +63.0 +26.4 +65.9
Service Sector

 Business confidence amongst Brazilian service providers has improved in the latest
  outlook period, albeit to a lesser extent than amongst manufacturers.
 Net balances for activity (+62.6), new business (+60.2), revenues (+62.2) and profits
  (+60.1) have all risen to their highest levels for a year and are the strongest in the global
  survey.
 Expectations of higher activity and profit levels have positively influenced service firms‟
  projections for employment and outsourcing. Job creation is set to be strong, while
  outsourcing is anticipated to rise at a solid pace.
 Spending on new capital is forecast to increase at a robust rate in the next twelve months.
 Inflationary pressures are set to remain solid in the year ahead, with net balances for input
  costs and output charges at +36.5 and +34.9 respectively in February, from +39.9 and
  +34.8 in October.
 Service providers expect staff costs to form the greatest part of total input price inflation,
  although service and non-staff costs are also set to rise at solid rates.


Comment from panelists:

“Investments in airport capacity and more tourists will help trade”
Hotels & Restaurants

“We have opportunities to work on the World Cup and Olympics”
 Transport & Storage

“Government investment in telecommunications will help us attract more custom”
Postage & Telecommunications

“Stronger market demand will boost volumes of new work”
Renting & Business Activities

“We will offer new services to attract more business”
Other Services


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +77.4 +78.3 +50.2 +44.9 +62.6
Business Revenues             +76.4 +76.1 +49.6 +45.8 +62.2
New Orders                    +76.0 +78.4 +49.2 +43.4 +60.2
Profits                       +70.4 +75.6 +45.8 +41.0 +60.1
Employment                    +60.6 +69.1 +38.4 +39.6 +54.9
Capital Expenditure           +40.1 +47.5 +36.0 +34.8 +46.0
Outsourcing                   +38.9 +34.7 +27.6 +32.0 +35.9
Input Prices                  +64.6 +57.3 +40.2 +39.9 +36.5
Output Prices                 +60.1 +56.7 +39.1 +34.8 +34.9
Staff Costs                   +65.5 +53.5 +42.0 +42.4 +40.5
Services Costs                +58.9 +44.8 +33.8 +35.1 +33.9
Non-Staff Costs               +48.4 +46.8 +37.2 +36.8 +36.2
Russia

Manufacturing Sector

 Russian manufacturers are confident about future activity levels. The net balance remains
  firmly positive at +50.8, despite falling to its lowest level since July 2009. A similar trend
  is evident for business revenues (+51.5).
 Strong growth of new orders is expected over the next twelve months. The net balance has
  risen to +58.3, above the long-run average level of +53.7.
 Inflationary pressures are forecast to intensify over the next twelve months. The net
  balances for input and output prices have both risen sharply, to +78.8 and +76.5
  respectively. The latter figure is a series record. Nevertheless, profits are set to rise, with
  the latest net balance little-changed from October‟s at +32.6.
 Employment growth in manufacturing is set to pick up slightly. The net balance improves
  to +27.3, greater than the series‟ historical average of +24.0.
 Capital expenditure, research & development spending and capacity utilization are all set
  to rise over the next twelve months.

Comment from panelists:

“Approaching pre-crisis production volumes”
Chemicals & Plastics

“Extending the range and quality of products, introducing new technology”
Basic Metals

“Increase in output volumes in connection with access to new markets”
Food & Drink

“Serious rises in raw material prices”
Food & Drink

“Shortage of skilled staff”
Transport & Storage

“Unfair competition”
Chemicals & Plastics

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +59.0 +61.7 +52.1 +51.9 +50.8
Business Revenues             +59.3 +64.2 +57.9 +59.9 +51.5
New Orders                    +53.9 +58.5 +54.2 +56.7 +58.3
Profits                       +41.6 +44.9 +37.1 +32.5 +32.6
Employment                    +30.9 +33.7 +25.4 +22.3 +27.3
Capacity Utilization          +41.6 +49.1 +40.8 +40.1 +45.5
Capital Expenditure           +24.7 +37.1 +32.4 +36.3 +30.3
R&D Expenditure               +27.0 +39.4 +34.5 +32.5 +25.0
Input Prices                  +63.5 +63.6 +68.3 +72.0 +78.8
Output Prices                 +55.1 +53.4 +58.5 +63.1 +76.5
Inventory: Output Ratio       -0.6 +8.6 -0.7 0.0          -7.6
Service Sector

 Russian service providers hold positive expectations for activity levels over the next
  twelve months. The net balance has eased to +45.6, the lowest since April 2009 but
  broadly in line with the global average (+46.5).
 The new business net balance is also the lowest since April 2009 (+44.8), but is higher
  than the global average (+42.1). The same trend is evident for employment (+22.4).
 Inflationary pressure on service providers‟ costs is expected to intensify over the current
  outlook period. The net balance for total input prices is at its highest since April 2008
  (+56.8). This is the second-highest figure of all countries surveyed after India and,
  consequently, well above the global average of +23.7.
 The output prices net balance of +49.6 is little-changed from the previous figure of +50.0,
  suggesting a similarly sharp expected rate of charge inflation in services. The latest figure
  is the highest of all countries surveyed.
 Profit expectations for the next twelve months are positive overall, but the degree of
  sentiment is the weakest since the April 2009 outlook period (+36.8).


Comment from panelists:

“Provision of new banking products, development of branch network and expansion of
customer base”
Financial Intermediation

“Retain market share by improving the quality of services”
Renting & Business Activities

“The pan-Arabian crisis will lead to significantly reduced traveler numbers in that region”
Transport & Storage

“Competition, rising prices and political instability”
Financial Intermediation

“Higher taxes and fuel prices”
Transport & Storage

                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +61.0 +51.7 +60.2 +51.2 +45.6
Business Revenues              +54.1 +47.0 +61.0 +52.3 +48.0
New Orders                     +63.7 +51.3 +59.3 +52.3 +44.8
Profits                        +55.5 +41.9 +52.0 +41.9 +36.8
Employment                     +32.9 +30.8 +39.8 +26.7 +22.4
Capital Expenditure            +32.9 +35.9 +34.1 +25.6 +25.6
Outsourcing                    +41.8 +39.3 +39.8 +34.9 +40.8
Input Prices                   +44.5 +53.0 +43.9 +53.5 +56.8
Output Prices                  +45.9 +39.3 +47.2 +50.0 +49.6
Staff Costs                    +32.9 +40.2 +47.2 +51.2 +51.2
Services Costs                 +37.0 +45.3 +36.6 +37.2 +46.4
Non-Staff Costs                +33.6 +41.9 +36.6 +38.4 +43.2
India

Manufacturing Sector

 Indian manufacturers are confident that activity will increase over the next twelve months.
  Moreover, the degree of positive sentiment is the strongest since January 2008. A marked
  rise in new business is expected to support the growth in activity.
 Revenues are projected to increase at the fastest pace since data collection began in
  January 2008.
 February data signal a marked rise in capacity utilization expectations at manufacturers in
  India. At +49.6, the index is much higher than in October 2010 (+27.1).
 However, staffing levels are set to grow at a modest rate (+20.8) that is broadly
  unchanged from the previous survey period.
 Inflationary pressures are predicted to intensify over the next year, with the net balance for
  input costs rising to +76.3, from +47.1 last October. Output prices are also expected to
  increase, and at a sharper rate than in the previous survey period, but to a notably lesser
  degree than costs.
 Indian manufacturers anticipate a strengthening in profits over the next year. However, the
  degree of confidence is slightly weaker than that seen in October 2010.
 Capex and R&D spending are projected to rise at their strongest rates since July 2008.

Comment from panelists:

“Shortages and high prices of raw materials”
Food & Drink

“Foreign demand is very good”
Textiles & Clothing

“Security products demand is high”
Electrical & Optical

“Market demand is good”
Basic Metals

“Advanced electrical devices introduced”
Mechanical Engineering

                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +30.3 +40.8 +57.9 +56.9 +65.3
Business Revenues             +36.9 +43.9 +61.9 +60.5 +67.5
New Orders                    +30.6 +36.1 +57.9 +55.2 +62.0
Profits                       +30.0 +41.2 +49.7 +53.3 +50.0
Employment                    +11.9 +20.1 +30.2 +20.9 +20.8
Capacity Utilization          +14.1 +28.2 +35.1 +27.1 +49.6
Capital Expenditure           +13.8 +31.0 +38.1 +32.4 +51.8
R&D Expenditure               +9.4 +18.0 +33.5 +26.1 +42.0
Input Prices                  +37.2 +50.7 +65.2 +47.1 +76.3
Output Prices                 +19.7 +22.1 +43.0 +23.5 +42.3
Inventory: Output Ratio       -2.2 +15.6 +32.3 +18.3 +24.8
Service Sector

 February data signal that Indian service providers are optimistic regarding business
  prospects over the next year. The sharpest anticipated rise in new business since October
  2007 is expected to support a marked increase in activity.
 Profits are set to increase at their strongest rate since April 2008.
 Staffing levels are set to rise solidly, reflective of growth of activity. Moreover, the
  projected increase in employment is the strongest since April 2008.
 Service providers also anticipate a rise in the amount of work outsourced.
 Input costs are forecast to rise at their fastest rate since data collection began in October
  2007. This expected cost inflation represents a marked acceleration from that forecast in
  October 2010.
 Output prices are predicted to increase solidly, but at a weaker rate than input costs.
 A solid rise in capex is projected, with confidence increasing in February to a survey-
  record high.

Comment from panelists:

“We are expanding our branches”
Financial Intermediation

“High cost of food”
Hotels & Restaurants

“Improvements in general economic conditions”
Renting & Business Activities

“Introduced new tour packages and holiday packages”
Transport & Storage

“Increased petrol and diesel prices”
Transport & Storage

“More competition”
Renting & Business Activities


                              Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity             +24.7 +43.2 +47.8 +50.0 +57.1
Business Revenues             +24.2 +43.2 +46.6 +51.6 +55.6
New Orders                    +22.1 +41.5 +47.0 +50.8 +56.7
Profits                       +27.3 +42.3 +41.7 +48.4 +53.2
Employment                    +16.9 +19.5 +26.3 +17.4 +38.1
Capital Expenditure           +8.7 +25.3 +27.5 +16.7 +44.8
Outsourcing                   -6.5 +19.1 +19.0 +7.0 +15.9
Input Prices                  +18.6 +15.4 +37.7 +31.8 +61.9
Output Prices                 +4.3 +13.7 +26.3 +15.1 +41.7
Staff Costs                   +16.5 +20.3 +32.0 +24.0 +57.1
Services Costs                +0.9 +9.1 +24.3 +6.2 +23.0
Non-Staff Costs               +12.1 +14.9 +27.5 +9.7 +35.7
China

Manufacturing Sector

 At +49.0 in February, the net balance for business activity signals that Chinese
  manufacturers remain optimistic regarding the one-year business outlook.
 New order volumes at manufacturing firms are forecast to be higher in twelve months‟
  time, with the degree of confidence the strongest for three outlook periods. Consequently,
  manufacturers expect business revenues to have risen come February 2012.
 Solid employment growth is forecast for the year ahead. A net balance of +25.3 is the
  highest since February 2010.
 Forecasts for purchase price inflation remain strong, with a net balance of +46.3 down
  only slightly from +47.2 signaled in October. Meanwhile, prices charged at the factory
  gate are also anticipated to be higher in twelve months‟ time.
 Profitability in the Chinese manufacturing sector is expected to rise in the year ahead,
  although confidence is the lowest in the current period of optimism, which now extends to
  six outlook periods.

Comment from panelists:

“New product launches”
Electrical & Optical

“A pick-up in domestic demand is anticipated”
Mechanical Engineering

“State-led policies will boost growth in the coming year”
Basic Metals

“Rising raw material prices pose a threat to growth”
Food & Drink

“Labor shortages”
Textiles & Clothing


                             Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity            +52.0 +63.5 +38.2 +49.8 +49.0
Business Revenues            +53.7 +58.9 +39.9 +51.5 +48.7
New Orders                   +51.3 +59.5 +39.9 +45.8 +48.0
Profits                      +44.3 +45.8 +34.6 +36.5 +32.0
Employment                   +27.7 +28.8 +19.3 +19.1 +25.3
Capacity Utilization         +38.3 +45.5 +29.2 +40.5 +36.0
Capital Expenditure          +34.3 +39.1 +32.6 +39.1 +40.7
R&D Expenditure              +44.3 +44.5 +34.2 +37.8 +37.0
Input Prices                 +27.3 +40.8 +20.6 +47.2 +46.3
Output Prices                +14.3 +24.7 +15.0 +33.1 +29.7
Inventory: Output Ratio      -2.3 -8.4 -1.3 -1.7 +0.7
Service Sector

 A net balance of +45.2 indicates that Chinese service providers expect business activity to
  be higher in twelve months‟ time, with positive sentiment the strongest in three outlook
  periods.
 Solid new business growth is forecast for the year ahead, although the degree of optimism
  is the lowest since the start of the series in October 2007.
 Companies expect to hire additional staff, with the forecast rate of job creation stronger
  than the global average. However, a net balance of +21.4 is the lowest in five outlook
  periods.
 Input costs are predicted to increase in the coming year, with a net balance of +37.5 the
  highest since February 2010. Staff costs are expected to be the greatest driver of overall
  input price inflation.
 Output prices are forecast to rise only modestly in the year ahead. A net balance of +8.0 is
  unchanged since the previous outlook period.


Comment from panelists:

“Reduced new business after the closure of Shanghai Expo”
Hotels & Restaurants

“Higher labor-related costs”
Transport & Storage

“State-led regulation will weigh on activity growth”
Renting & Business Activities

“Economic recovery and firmer market demand”
Transport & Storage

“New product developments”
Other Services


                               Oct-09 Feb-10 Jun-10 Oct-10 Feb-11
Business Activity              +52.3 +59.9 +44.0 +41.2 +45.2
Business Revenues              +56.0 +59.2 +44.7 +35.2 +40.1
New Orders                     +52.0 +60.5 +40.7 +38.2 +37.5
Profits                        +48.7 +53.6 +36.8 +31.6 +33.4
Employment                     +30.7 +32.9 +26.2 +23.3 +21.4
Capital Expenditure            +33.0 +40.8 +31.5 +29.6 +30.4
Outsourcing                    +14.0 +16.8 +13.6 +13.0 +12.4
Input Prices                   +37.7 +46.7 +33.8 +29.2 +37.5
Output Prices                  +5.0 +10.2 +7.3 +8.0 +8.0
Staff Costs                    +31.0 +40.1 +33.4 +32.6 +39.8
Services Costs                 +14.0 +17.8 +13.2 +10.3 +11.4
Non-Staff Costs                +19.7 +31.3 +23.8 +21.9 +21.7
Global Business Activity – Manufacturing

Q. Please state whether you expect the overall level of business activity at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 The net balance of global manufacturers expecting activity growth during the coming year
  increased to +52.8 in February from +40.8 in October. The latest reading is the highest
  since global data were first available in October 2009.
 Brazil (+73.9) and India (+65.3) are set to see the greatest expansions of activity.
 Fellow BRIC members Russia (+50.8) and China (+49.0) are also predicted to register
  marked growth.
 Confidence among US manufacturers has risen since the previous outlook survey, as
  signaled by the net balance climbing from +52.8 to +64.3.
 The EU net balance is +51.7, up from +39.4 in October, its highest level since January
  2007.
 Japanese firms‟ optimism has improved to a series-high (+35.8).
 Electrical goods manufacturers are the most confident regarding the one-year outlook for
  activity.
 Confidence is least marked in the Timber & Paper sector.


Comment from panelists:

“Business is expanding and sales have been increasing”
Food & Drink

“Economy continuing to improve”
Transport

“Implementation of major investment”
Basic Metals



                    Global EU             BRIC      US          Japan
Jun '10             +49.9 +44.5           +45.7     +69.3       +30.8
Oct '10             +40.8 +39.4           +49.9     +52.8       +15.5
Feb '11             +52.8 +51.7           +53.5     +64.3       +35.8


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +45.4     +39.0     +56.3       +47.8      +30.4      +46.1     +42.2    +52.2   +54.5
Oct '10   +43.2     +50.8     +47.7       +49.5      +25.7      +37.3     +37.1    +36.8   +46.3
Feb '11   +48.5     +49.8     +63.6       +58.5      +37.3      +32.1     +54.9    +48.9   +57.7
Global Business Revenues – Manufacturing

Q. Please state whether you expect the overall business revenues at your company to be
higher, the same or lower in twelve months‟ time compared with the current levels.

 Sentiment regarding business revenues has risen since October. The February net balance
  of +48.9 is a survey-record high.
 US manufacturers anticipate a notably strong rate of revenue growth, with confidence
  improving on that recorded in the previous outlook survey.
 Optimism in the BRIC region has risen to a one-year high (+53.7).
 EU manufacturers‟ forecasts for revenues are the strongest since January 2007. February‟s
  net balance of +48.8 is up from +36.9 in October.
 Japanese firms are the most optimistic regarding revenues since data were first available
  in October 2009.
 Electrical companies hold the most upbeat forecasts for revenues (+57.0).
 Chemicals & Plastics (+54.0) and Other Manufacturing (+53.0) firms are also notably
  confident.


Comment from panelists:

“Increasing our share of sales in major markets”
Chemicals & Plastics

“Global stability driving developing world luxury consumption”
Transport

“Higher volume of sales and production”
Mechanical Engineering


                    Global EU             BRIC      US          Japan
Jun '10             +45.0 +40.1           +47.6     +67.0       +14.8
Oct '10             +37.4 +36.9           +51.9     +48.7       +7.6
Feb '11             +48.9 +48.8           +53.7     +61.2       +25.5

          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +40.0     +40.8     +46.2       +52.2      +28.2      +35.5     +29.6    +43.5   +54.7
Oct '10   +37.4     +44.3     +44.0       +46.5      +24.0      +24.0     +34.3    +36.3   +41.1
Feb '11   +45.7     +47.9     +57.0       +54.0      +42.8      +31.5     +51.7    +44.4   +53.0
Global New Business – Manufacturing

Q. Please state whether you expect the overall level of new orders at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Global manufacturers expect new business volumes to rise strongly during the coming
  year. The net balance of firms anticipating a rise in new orders has risen to a series-record
  high of +50.2 from +39.1 in October.
 Strong rates of expansion are forecast in the US (+58.6), BRIC area (+53.3) and EU
  (+51.2).
 Japanese manufacturers are set to record a solid rise in new business. February‟s net
  balance of +33.5 is the highest in the five periods of data collection to date.
 The Electrical sector is projected to record the greatest increase in new orders.
 Timber & Paper manufacturers anticipate the slowest (albeit still solid) rate of growth.


Comment from panelists:

“Opportunities of winning new contracts and presence on new platforms”
Transport

“Expanding into new products and markets”
Basic Metals

“New projects for the auto industry”
Mechanical Engineering


                    Global EU             BRIC      US          Japan
Jun '10             +48.0 +46.2           +46.9     +64.8       +25.1
Oct '10             +39.1 +38.3           +47.3     +47.5       +19.5
Feb '11             +50.2 +51.2           +53.3     +58.6       +33.5


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +47.2     +45.5     +51.3       +48.9      +27.2      +45.0     +38.7    +53.5   +49.3
Oct '10   +43.7     +52.0     +37.2       +50.9      +29.1      +33.9     +41.3    +37.1   +37.9
Feb '11   +41.8     +48.9     +57.1       +52.4      +45.2      +32.8     +53.8    +51.8   +55.7
Global Profits – Manufacturing

Q. Please state whether you expect profits at your company to be higher, the same or lower in
twelve months‟ time compared with the current level.

 The net balance of global manufacturers expecting growth of profits during the coming
  year has increased to +35.5 in February from +27.2 in October.
 Optimism has risen in the US, as signaled by the net balance climbing to +56.3 from
  +43.8.
 BRIC firms continue to forecast solid growth of profits. Brazilian companies are
  particularly upbeat.
 Expectations regarding profits in the EU manufacturing sector are the highest since
  January 2007.
 Japanese firms are more optimistic regarding profits than at any time since October 2009.
 Confidence is strongest in the Electrical and „Other‟ sectors.
 Timber & Paper firms hold the weakest sentiment.

Comment from panelists:

“More market share as we expand your product offerings”
Electrical & Optical

“Improved productivity and company performance”
Other Manufacturing

“Higher demand and higher output prices”
Basic Metals

                    Global EU             BRIC      US          Japan
Jun '10             +36.9 +22.0           +40.2     +63.7       +10.9
Oct '10             +27.2 +19.7           +37.5     +43.8       +1.4
Feb '11             +35.5 +25.0           +38.4     +56.3       +13.9


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +30.5     +33.0     +32.0       +42.4      +19.4      +33.3     +28.0    +35.9   +44.4
Oct '10   +24.0     +36.0     +30.2       +35.4      +11.4      +19.7     +25.5    +23.0   +33.8
Feb '11   +29.7     +36.8     +43.6       +37.5      +29.3      +21.8     +36.9    +33.5   +43.1
Global Employment – Manufacturing

Q. Please state whether you expect the overall level of employment at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 The outlook for employment in the global manufacturing sector has improved to the
  highest since global data were first collected in October 2009.
 The net balance of firms planning to add extra staff over the coming year has increased to
  +25.2 from +16.5.
 Employment growth is set to pick up in the US manufacturing sector (+37.6 from +24.5).
 Optimism in the BRIC region is the highest for a year. In line with expectations for
  activity, jobs growth is expected to be particularly strong in Brazil.
 EU manufacturers‟ hiring intentions are the strongest since the start of the series in
  January 2006.
 Japanese firms also forecast a rise in employment. Although indicative of only modest
  growth, February‟s net balance of +9.9 is nevertheless the highest in the five outlook
  surveys where data for Japan have been available.
 Companies in the Basic Metals sector predict the sharpest increase in headcounts.
 Jobs growth is set to be weakest in the Timber & Paper category.


Comment from panelists:

“Increase in recruitment to try and gain/win back new business”
Basic Metals

“Increasing our sales team”
Electrical & Optical

“More flexible laws regarding employment”
Transport


                    Global EU             BRIC      US          Japan
Jun '10             +20.9 +9.8            +26.5     +40.4       -0.5
Oct '10             +16.5 +11.9           +21.2     +24.5       +5.4
Feb '11             +25.2 +18.4           +30.1     +37.6       +9.9


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +22.9     +19.2     +28.0       +16.8      +17.7      +21.0     +19.9    +17.8   +23.3
Oct '10   +18.5     +9.1      +15.4       +20.3      +16.8      +14.2     +20.3    +19.7   +21.8
Feb '11   +18.0     +23.2     +27.8       +27.9      +25.2      +12.7     +32.3    +24.2   +27.5
Global Capacity Utilization – Manufacturing

Q. Please state whether you expect the overall level of capacity utilization at your company to
be higher, the same or lower in twelve months‟ time compared with the current level.

 Capacity utilization in the global manufacturing sector is expected to rise during the next
  twelve months.
 A net balance of +38.9 firms anticipate an increase, up from +22.8 in October and the
  highest in five outlook surveys in which global data have been available.
 The greatest rise in capacity utilization is forecast in the EU, where expectations are the
  highest since January 2007.
 BRIC manufacturers predict the strongest rise for a year (+42.0).
 A net balance of +38.4 US manufacturers expect higher capacity utilization in twelve
  months‟ time, up from +12.1 in October.
 Expectations have also risen in Japan, with February‟s net balance of +29.4 the strongest
  recorded to date.
 Electrical & Optical goods producers anticipate the sharpest increase in capacity
  utilization.
 The slowest rise is forecast by Timber & Paper firms.


Comment from panelists:

“Higher volume of production”
Chemicals & Plastics

“Growth of existing and new customer base projects requiring purchase of plant and layout
modifications to increase turnover and profitability”
Basic Metals

“New product launches will generate increased production”
Mechanical Engineering



                    Global EU             BRIC      US          Japan
Jun '10             +34.6 +38.4           +35.4     +38.2       +23.9
Oct '10             +22.8 +32.3           +38.9     +12.1       +12.9
Feb '11             +38.9 +45.0           +42.0     +38.4       +29.4

          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +36.2     +26.9     +38.5       +31.5      +24.8      +32.0     +21.8    +46.3   +30.5
Oct '10   +10.8     +26.5     +27.8       +23.9      +16.7      +16.1     +26.1    +27.3   +25.9
Feb '11   +37.2     +42.2     +48.3       +41.4      +31.8      +29.2     +36.0    +39.5   +40.9
Global Capital Expenditure – Manufacturing

Q. Please state whether you expect the value of capital expenditure (measured in „real‟ terms)
at your company to be higher, the same or lower in twelve months‟ time compared with the
current level.

 Global manufacturers have upwardly revised their capex plans since the previous outlook
  survey.
 A net balance of +25.2 firms plan to increase their spending on fixed assets, the highest
  since global data were first available in October 2009.
 Capital spending is set to rise fastest in the BRIC region. The latest net balance of +43.7 is
  the highest since July 2008.
 US manufacturers have upgraded their capex plans (+22.4 from +6.8).
 Expectations in Japan are the highest in the five survey periods for which data have been
  available.
 The net balance of EU firms planning to increase their capex is +18.2, the highest since
  July 2007.
 Textiles & Clothing producers forecast the strongest rise in capital expenditure.
 The weakest growth is expected in the Timber & Paper sector.


Comment from panelists:

“Growth of our biggest customer requires capital investment in order to increase production
capacity”
Timber & Paper

“We have invested heavily in new machinery, equipment and premises and are in good shape
to increase our market share”
Timber & Paper

“Opportunities for expansion on the horizon”
Basic Metals



                    Global EU             BRIC      US          Japan
Jun '10             +21.7 +10.3           +36.7     +28.5       +11.6
Oct '10             +15.5 +12.9           +37.6     +6.8        +11.7
Feb '11             +25.2 +18.2           +43.7     +22.4       +20.8


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +31.4     +28.0     +25.5       +28.3      +21.2      +13.5     +12.0    +14.4   +24.0
Oct '10   +12.7     +27.6     +14.4       +20.2      +11.5      0.0       +18.9    +19.8   +12.0
Feb '11   +22.7     +37.2     +32.9       +27.7      +19.5      +8.5      +24.7    +26.3   +28.3
Global R&D Expenditure – Manufacturing

Q. Please state whether you expect expenditure on research and development at your
company to be higher, the same or lower in twelve months‟ time compared with the current
spend.

 Optimism regarding R&D spending in the global manufacturing sector has improved to a
  series-record, with the net balance of +25.1 firms planning a rise.
 The strongest growth is forecast in the BRIC area, where confidence is the highest for a
  year (+39.7).
 US companies have markedly upgraded their plans for R&D expenditure since October.
 Confidence has also increased in Japan (+20.8 from +12.5).
 Expectations in the EU are the highest of the past nine outlook surveys.
 The greatest increase in R&D spending is set to occur in the Electrical & Optical sector.
 Textiles & Clothing and Mechanical Engineering companies also forecast solid growth.


Comment from panelists:

“NPD in new areas of product range”
Electrical & Optical

“We have purchased some companies and are doing some expanding including new product
development”
Other Manufacturing

“Innovation in new products”
Timber & Paper



                    Global EU             BRIC      US          Japan
Jun '10             +20.8 +8.6            +37.8     +21.3       +19.4
Oct '10             +15.5 +13.4           +35.7     +7.2        +12.5
Feb '11             +25.1 +18.9           +39.7     +24.3       +20.8



          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +27.5     +28.6     +28.0       +25.2      +17.7      +15.4     +8.9     +22.0   +23.6
Oct '10   +11.2     +22.9     +25.7       +18.5      +9.0       +5.1      +16.5    +15.4   +11.8
Feb '11   +21.4     +34.2     +38.2       +19.8      +26.1      +12.2     +22.2    +30.2   +19.0
Global Input Prices – Manufacturing

Q. Please state whether you expect the overall level of input prices at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Expectations regarding input price inflation have risen, with a net balance of +47.3 firms
  forecasting an increase in costs over the coming year, compared with +30.2 in October.
 Inflation is set to be steepest in the EU. February‟s net balance of +70.4 is a survey-record
  high.
 BRIC firms anticipate the sharpest cost increases since July 2008.
 Predictions for cost inflation in the US are the highest in the five outlook periods where
  data have been available.
 A net balance of +18.5 Japanese firms anticipate higher input prices in a year‟s time, in
  contrast to flat expectations in October.
 Input costs are set to rise at faster rates across all nine industry sectors.
 The Basic Metals, Textiles & Clothing, Other Manufacturing, Food & Drink and
  Chemicals & Plastics sectors are all set to register similarly strong rates of cost inflation.


Comment from panelists:

“Volatile commodity prices – coffee, cocoa”
Food & Drink

“Shortages in raw material availability”
Chemicals & Plastics

“Increase of raw materials and fuel prices”
Other Manufacturing



                    Global EU             BRIC      US          Japan
Jun '10             +34.1 +53.8           +34.9     +33.7       +9.9
Oct '10             +30.2 +52.4           +47.7     +21.9       0.0
Feb '11             +47.3 +70.4           +54.9     +43.3       +18.5


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +38.9     +40.7     +30.7       +37.9      +21.8      +47.1     +30.7    +35.9   +42.8
Oct '10   +28.5     +32.9     +22.8       +35.9      +17.1      +40.0     +35.5    +20.9   +45.7
Feb '11   +55.5     +56.5     +32.8       +55.1      +36.1      +48.0     +57.9    +47.6   +55.8
Global Output Prices – Manufacturing

Q. Please state whether you expect the overall level of output prices at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 In line with the trend for input costs, output charge inflation is set to gather pace in the
  next twelve months.
 The net balance of global manufacturers planning to increase their selling prices has
  climbed to +30.7 from +17.8 in the previous survey period.
 The greatest rise in factory gate prices is expected in the EU. February‟s net balance of
  +42.9 is the highest since the start of the series in January 2006.
 US firms are planning to increase their selling prices at a much faster pace than was
  predicted in October.
 Forecasts for output price inflation in the BRIC area are the highest since July 2008
  (+39.7).
 In contrast, Japanese firms continue to foresee a reduction in charges, albeit to a lesser
  extent than in the previous four outlook surveys.
 Food & Drink producers anticipate the steepest rise in selling prices (+51.0).


Comment from panelists:

“Charges raised to reflect increase in our raw material costs”
Basic Metals

“Less competition from other manufacturers as they may be closing down”
Food & Drink

“Increase of raw material prices not entirely passed on to clients”
Mechanical Engineering



                    Global EU             BRIC      US          Japan
Jun '10             +20.5 +25.7           +27.4     +33.3       -12.1
Oct '10             +17.8 +27.3           +34.6     +19.2       -11.2
Feb '11             +30.7 +42.9           +39.7     +40.7       -7.8



          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech    Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng     Manufacturing
Jun '10   +32.0     +26.0     +11.0       +29.6      +2.0       +25.4     +17.1    +14.6   +28.3
Oct '10   +23.0     +28.6     +8.6        +28.8      +7.4       +15.5     +23.4    +7.1    +30.7
Feb '11   +51.0     +41.7     +14.2       +36.2      +14.9      +27.0     +47.8    +17.0   +35.0
Global Inventory: Output Ratio

Q. Please state whether you expect the ratio of stocks of finished goods to output at your
company to be higher, the same or lower in twelve months‟ time compared with the current
ratio.

 Manufacturers across the globe expect a marginal increase in their stocks of finished
  goods as a proportion of output over the coming year.
 February‟s net balance of +1.2 is up from -2.5 in October.
 Stock building is anticipated in the US and BRIC region, and at faster rates than were
  forecast in the previous outlook survey.
 In contrast, firms in the EU and Japan expect to reduce their inventories relative to output.
 Growth of stocks is predicted in the Other Manufacturing, Food & Drink and Basic Metals
  sectors.
 Broadly flat trends are forecast in the Chemicals & Plastics, Electrical & Optical and
  Textiles & Clothing categories.
 Timber & Paper, Mechanical Engineering and Transport companies foresee declines in
  stock levels.


Comment from panelists:

“Building our stocks in anticipation of higher demand”
Other Manufacturing

“Improved stock management in place”
Electrical & Optical

“Streamlined our inventory holdings”
Timber & Paper



                    Global EU             BRIC      US          Japan
Jun '10             +2.7 -10.4            +9.1      +15.0       -6.1
Oct '10             -2.5 -12.3            +3.5      +6.8        -10.3
Feb '11             +1.2 -11.6            +9.4      +12.2       -7.8


          Food      Textiles Electrical   Chemicals Transport   Timber    Basic    Mech   Other
          & Drink   & Clothing            & Plastics            & Paper   Metals   Eng    Manufacturing
Jun '10   +5.6      +0.9      +1.8        +5.6       +3.5       +5.1      -0.8     -0.8   +1.7
Oct '10   +3.8      -0.9       -3.8       +3.8       -9.2       -4.2      -6.4     -1.8   +1.0
Feb '11   +5.2      -0.9      +0.3        +0.4       -6.3       -12.4     +4.6     -7.8   +6.4
Global Business Activity – Services

Q. Please state whether you expect the overall level of business activity at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Global service providers are the most optimistic regarding the one-year outlook for
  business activity since October 2009.
 February‟s net balance of +46.5 is up from +35.8 in the previous outlook period.
 US companies hold markedly upbeat sentiment (+61.6).
 Forecasts for activity growth in the BRIC area are the highest in the past three outlook
  surveys.
 Confidence in the EU service sector is the strongest since April 2007.
 Service providers in Japan anticipate a modest rise in business activity (+13.6), following
  expectations for a marginal decline in the previous survey.
 Growth of activity is set to be fastest in the Post & Telecommunications sector.
 Hotels & Restaurants are the least optimistic.



Comment from panelists:

“Optimistic about the economy improving”
Renting & Business Activities

“Opportunity of growth through acquisition”
Transport & Storage

“The global market for our products is growing and we are planning to increase our market
share”
Renting & Business Activities



                     Global EU          BRIC        US          Japan
Jun '10              +43.9 +33.6        +46.8       +61.2       +15.6
Oct '10              +35.8 +42.1        +43.7       +46.0       -0.7
Feb '11              +46.5 +44.3        +48.0       +61.6       +13.6


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +37.9      +37.1     +46.9     +23.9      +45.9       +35.5
Oct '10   +49.4      +30.0     +38.3     +26.1      +41.8       +30.3
Feb '11   +54.8      +44.9     +50.2     +31.6      +52.9       +36.2
Global Business Revenues – Services

Q. Please state whether you expect the overall business revenues at your company to be
higher, the same or lower in twelve months‟ time compared with the current levels.

 The net balance of global service providers anticipating growth of business activity during
  the coming year has increased to +39.0 in February from +31.6 in October.
 Higher revenues are expected across all four major regions, led by the US (+51.0).
 BRIC companies are more positive than was the case in the previous outlook period
  (+44.6 from +40.0).
 Confidence among EU service providers has increased to the strongest since April 2007.
 Having reported pessimism in October, Japanese firms are now mildly optimistic
  regarding revenues (+8.6).
 The Post & Telecommunications and Financial Intermediation sectors are set to post the
  sharpest expansions in revenues.


Comment from panelists:

“We are picking up business shed by public sector reduction in service provision”
Renting & Business Activities

“The global market for our products is growing and we are planning to increase our market
share”
Renting & Business Activities

“We are expanding into social media which should increase our business in the coming year”
Transport & Storage



                     Global EU          BRIC        US          Japan
Jun '10              +40.7 +28.6        +47.2       +60.7       +6.2
Oct '10              +31.6 +35.8        +40.0       +43.1       -5.4
Feb '11              +39.0 +38.6        +44.6       +51.0       +8.6


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +29.8      +34.3     +42.8     +19.6      +43.8       +30.9
Oct '10   +26.2      +25.5     +34.5     +19.7      +27.6       +25.1
Feb '11   +47.8      +40.0     +43.1     +30.4      +47.3       +24.4
Global New Business Services

Q. Please state whether you expect the overall level of new business at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 The net balance of global service providers anticipating growth of new business during the
  coming twelve months has improved to +42.1 from +33.6 in the previous outlook survey.
 All four major regions are set to see higher levels of incoming new work.
 Optimism is strongest in the US (+55.9).
 BRIC service providers are slightly more confident than in October, with the net balance
  rising from +41.7 to +42.4.
 Positive sentiment amongst EU companies is the highest in the past nine outlook surveys.
 Japanese firms expect a modest rise in new business (+11.1).
 Post & Telecommunications companies are the most upbeat.
 The slowest rise in new work is anticipated by Hotels & Restaurants.


Comment from panelists:

“New consultancy projects underway”
Financial Intermediation

“Some of our weaker competitors have dropped out leaving more potential business for us”
Renting & Business Activities

“Guests returning”
Hotels & Restaurants



                     Global EU          BRIC        US          Japan
Jun '10              +39.1 +32.8        +44.3       +58.4       -0.3
Oct '10              +33.6 +36.8        +41.7       +41.4       +6.8
Feb '11              +42.1 +41.0        +42.4       +55.9       +11.1


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +27.0      +34.4     +42.6     +17.7      +43.6       +25.5
Oct '10   +45.8      +31.2     +40.1     +21.1      +31.0       +22.4
Feb '11   +53.3      +40.1     +44.6     +26.4      +48.4       +35.1
Global Profits – Services

Q. Please state whether you expect profits at your company to be higher, the same or lower in
twelve months‟ time compared with the current level.

 Optimism regarding profits has rebounded following a dip last October.
 A net balance of +35.1 service providers globally forecast an increase in profits, up from
  +26.8.
 US companies are bullish regarding profits, as signaled by a rise in the net balance from
  +37.9 to +52.5.
 Confidence has improved in the BRIC region (+38.2 from +35.5).
 EU service providers‟ optimism is broadly unchanged since the previous survey.
 Profit forecasts in Japan have turned positive. However, a net balance of +7.1 points to
  only a marginal rise in profits during the next twelve months.
 Financial Intermediation companies predict the sharpest rise in profits, closely followed
  by Post & Telecommunications firms.


Comment from panelists:

“Expanding economy gives customers bigger budgets”
Renting & Business Activities

“Freeing up of the capital markets”
Financial Intermediation

“Increased government regulations and taxes”
Other Services



                     Global EU          BRIC        US          Japan
Jun '10              +35.1 +18.1        +39.8       +56.5       +5.2
Oct '10              +26.8 +24.7        +35.5       +37.9       -1.4
Feb '11              +35.1 +24.2        +38.2       +52.5       +7.1


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +35.0      +27.7     +36.1     +14.7      +40.9       +26.2
Oct '10   +29.2      +24.1     +31.9     +5.9       +20.5       +18.8
Feb '11   +44.7      +37.3     +36.9     +20.8      +44.9       +26.5
Global Employment – Services

Q. Please state whether you expect the overall level of employment at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Optimism regarding employment in the global service sector has improved to the highest
  since global data were first available in October 2009.
 The net balance of firms predicting growth of staffing levels is +19.4, up from +16.1 in
  the previous outlook period.
 BRIC companies have upgraded their plans for headcounts slightly, while US firms are
  also more optimistic than was the case in October.
 Employment forecasts in the EU service sector are the highest in the past eight outlook
  surveys (+16.1).
 Growth of payroll numbers in Japan is expected to be faster than was predicted in
  October.
 Firms in the Post & Telecommunications sector forecast the sharpest rise in employment
  (+25.9).
 Hotels & Restaurants are set to post the slowest rise in jobs.



Comment from panelists:

“Better quality of staff looking for work”
Other Services

“We are hiring new agents”
Renting & Business Activities

“Internal growth. We‟re hiring more people”
Renting & Business Activities



                     Global EU          BRIC        US          Japan
Jun '10              +19.3 +7.4         +28.7       +29.9       +5.2
Oct '10              +16.1 +13.8        +24.2       +21.3       +2.4
Feb '11              +19.4 +16.1        +26.1       +23.6       +10.4


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +23.2      +15.3     +21.4     -0.4       +39.2       +7.1
Oct '10   +17.1      +18.0     +19.8     +10.1      +15.6       +8.7
Feb '11   +25.9      +20.8     +24.4     +8.8       +18.4       +10.6
Global Capital Expenditure – Services

Q. Please state whether you expect the value of capital expenditure (measured in „real‟ terms)
at your company to be higher, the same or lower in twelve months‟ time compared with the
current level.

 Capital expenditure in the global service sector is set to rise during the next twelve
  months, although optimism has slipped since October.
 February‟s net balance of +10.9 is the lowest of the past four outlook surveys.
 EU service providers forecast only slight growth of capex, despite confidence improving
  to the highest since October 2007.
 Forecasts for investment in capital have been raised in Japan, but remain modest.
 US firms are the least confident regarding capital spending in the five outlook surveys
  where data have been available.
 Optimism regarding capex in the BRIC area is the strongest for a year (+32.8).
 Financial Intermediation firms anticipate the weakest rise in capital spending, while
  Transport & Storage companies expect the strongest growth.


Comment from panelists:

“Investing in systems upgrade”
Transport & Storage

“Focus on cost cutting”
Other Services

“We‟ve got a completely new telephone system and other tech upgrades”
Financial Intermediation



                     Global EU          BRIC        US          Japan
Jun '10              +13.4 +1.8         +31.6       +17.3       +9.8
Oct '10              +12.4 +4.8         +28.0       +17.2       +2.7
Feb '11              +10.9 +5.3         +32.8       +10.3       +7.9



          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +26.5      +12.8     +14.5     +12.3      +18.3       +7.8
Oct '10   +21.4      +21.2     +11.1     +22.8      +3.8        +5.5
Feb '11   +14.5      +21.7     +10.2     +11.7      +6.7        +8.5
Global Outsourcing – Services

Q. Please state whether you expect the value of outsourcing of business activities by your
company (measured in „real‟ terms) to be higher, the same or lower in twelve months‟ time
compared with the current level.

 The amount of work outsourced by worldwide service providers is set to increase slightly
  over the coming year (+5.0).
 Growth is forecast to be strongest in the BRIC region (+17.9).
 Japan (+5.4) and the US (+5.3) are expected to record only marginal increases in
  outsourcing.
 EU firms continue to anticipate a small reduction in the amount of work they outsource (-
  1.0).
 Five of the six monitored sectors are forecast to see higher levels of outsourcing, led by
  Post & Telecommunications (+11.9).
 Financial Intermediation is the only category where a reduction is predicted.


Comment from panelists:

“Looking to contract out more work”
Post & Telecommunications

“Making greater use of outside providers”
Transport & Storage

“Drop in workloads means we will outsource less business”
Other Services



                     Global EU          BRIC      US       Japan
Jun '10              +6.6 -2.9          +18.3     +9.3     +6.5
Oct '10              +1.6 -0.2          +16.2     +1.7     -4.1
Feb '11              +5.0 -1.0          +17.9     +5.3     +5.4


          Post &     Trans &   Renting & Hotels & Financial Other
          Telecoms   Storage   Business Rest‟s    Intermed Services
Jun '10   +10.9      +6.1      +7.7      -1.0     +0.2      +6.3
Oct '10   +29.5      +11.9     +1.0      -2.2      -10.4    -1.1
Feb '11   +11.9      +10.3     +6.5      +6.5      -2.0     +3.3
Global Input Costs – Total

Q. Please state whether you expect the overall level of input costs at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Expectations regarding input costs have increased modestly since the previous outlook
  survey, as signaled by a rise in the net balance to +23.7 in February from +20.5.
 Cost inflation in the BRIC region is forecast to be the sharpest for a year.
 EU service providers also anticipate a solid increase in input prices. February‟s net
  balance of +38.4 is the highest since April 2008.
 Forecasts for input cost inflation in the US are the lowest for a year.
 Japanese companies foresee a marginal increase in costs (+2.9).
 The strongest inflation of input prices is predicted in the Transport & Storage sector.
 Providers of Other Services expect the slowest rise in costs.


Comment from panelists:

“Rising cost of fuel”
Post & Telecommunications

“Input costs are rising dramatically”
Renting & Business Activities

“Rise in agricultural crop prices”
Hotels & Restaurants




                     Global EU          BRIC        US          Japan
Jun '10              +23.0 +28.4        +35.9       +24.3       +5.5
Oct '10              +20.5 +29.8        +33.2       +25.9       -11.2
Feb '11              +23.7 +38.4        +42.6       +19.8       +2.9



          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +16.7      +31.4     +22.4     +23.0      +21.6       +21.9
Oct '10   +20.2      +33.5     +19.7     +26.6      +16.9       +10.8
Feb '11   +24.5      +38.4     +23.3     +29.1      +31.4       +15.0
Global Input Costs (Staff) – Services

Q. Please state whether you expect the overall level of staff costs at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Staff costs in the global service sector are expected to rise at a sharper rate than was
  forecast in the previous outlook survey.
 A net balance of +26.3 firms anticipate higher labor costs, up from +19.7 in October.
 Expectations for staff costs are the highest since April 2008 in both the BRIC area and the
  EU.
 Wage bills in the US are also set to rise at a faster pace than was predicted in the autumn.
 A slight increase in staff costs is anticipated by Japanese firms (+6.8).
 Post & Telecommunications firms and Hotels & Restaurants foresee the strongest
  inflation of labor costs.



Comment from panelists:

“Upward pressure on salary costs”
Financial Intermediation

“Shortage of skilled staff leading to higher wages”
Post & Telecommunications

“High unemployment means plenty of labor available”
Hotels & Restaurants




                     Global EU          BRIC        US          Japan
Jun '10              +20.9 +27.8        +35.5       +19.6       +6.5
Oct '10              +19.7 +36.3        +34.4       +16.7       -3.4
Feb '11              +26.3 +38.6        +43.3       +23.6       +6.8


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +16.0      +18.4     +22.0     +19.1      +23.5       +18.4
Oct '10   +27.4      +35.9     +17.4     +14.7      +18.9       +15.5
Feb '11   +36.3      +31.9     +25.2     +35.9      +31.2       +20.6
Global Input Costs (Bought-In) – Services

Q. Please state whether you expect the overall level of bought in/outsourced service costs at
your company to be higher, the same or lower in twelve months‟ time compared with the
current level.

 A net balance of +12.2 companies in the global service sector anticipate a rise in the cost
  of outsourced services during the next twelve months, up from +5.7 in October.
 The greatest inflation of outsourcing costs is expected in the BRIC region (+18.5).
 EU companies anticipate that the cost of their bought-in services will rise at the fastest
  pace since April 2008.
 Outsourcing costs in the US are expected to rise moderately (+11.0).
 Japanese firms expect a slight increase, in contrast to predictions of a decline in the
  previous outlook survey.
 Transport & Storage companies anticipate the strongest rise in outsourcing costs (+22.4).


Comment from panelists:

“Our suppliers have passed on higher raw material prices”
Renting & Business Activities

“Looking to negotiate better rates”
Other Services

“Greater competition driving down costs”
Renting & Business Activities




                     Global EU          BRIC        US          Japan
Jun '10              +9.7 +8.7          +18.8       +11.2       +2.6
Oct '10              +5.7 +10.9         +14.8       +7.5        -10.2
Feb '11              +12.2 +17.1        +18.5       +11.0       +5.0



          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +13.1      +17.9     +8.3      +9.4        -1.2       +12.5
Oct '10   +10.6      +12.8     +5.2      +9.4       +0.8        +7.2
Feb '11   +18.0      +22.4     +9.9      +18.2      +13.1       +15.4
Global Input Costs (All Other) – Services

Q. Please state whether you expect the level of all other non-staff costs at your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 Service providers expect an increase in all other non-staff costs in the coming year.
 The net balance has risen to +16.6 in February from +13.3 in October.
 BRIC companies anticipate the sharpest rise for a year.
 The US and the EU are also set to register stronger rates of inflation.
 A net balance of +6.8 indicates that Japanese service providers expect a modest increase
  in all other non-staff costs.
 The Transport & Storage sector is set to post the fastest rise.
 The weakest inflation is predicted in the Post & Telecommunications sector.


Comment from panelists:

“Commodity price inflation”
Other Services

“Increased petrol and diesel price”
Transport & Storage

“Influence of worldwide rise in food prices”
Hotels & Restaurants




                     Global EU          BRIC        US          Japan
Jun '10              +14.2 +8.8         +26.8       +17.8       +5.9
Oct '10              +13.3 +11.8        +23.5       +17.8       -0.7
Feb '11              +16.6 +16.8        +27.0       +18.3       +6.8



          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +14.2      +22.9     +10.9     +16.3      +18.7       +11.9
Oct '10   +14.6      +19.2     +12.1     +18.7      +13.6       +3.3
Feb '11   +10.9      +24.6     +15.5     +23.9      +20.4       +14.9
Global Prices Charged – Services

Q. Please state whether you expect the overall level of prices charged by your company to be
higher, the same or lower in twelve months‟ time compared with the current level.

 The outlook for charges in the global service sector is the strongest since data were first
  available in October 2009.
 A net balance of +15.4 firms expect to raise their output prices in the next twelve months,
  up from +10.2 in the previous survey.
 US companies are the most optimistic regarding charges in the past four outlook periods
  (+21.7).
 A net balance of +18.9 service providers in the BRIC region anticipate growth of selling
  prices, the highest since April 2009.
 Confidence among EU firms is the strongest in the past seven survey periods.
 Japanese firms continue to forecast a decline in charges, albeit to a lesser extent than was
  predicted in October.
 Inflation of tariffs is set to be sharpest in the Transport & Storage sector.
 The weakest rise in output prices is anticipated in the Other Services category.



Comment from panelists:

“Prices have to go up, we‟ve been holding off for as long as we can”
Renting & Business Activities

“Increasing competitive pressures”
Hotels & Restaurants

“Our prices are competitive and could result in additional business”
Renting & Business Activities




                     Global EU          BRIC        US          Japan
Jun '10              +12.0 +7.6         +16.6       +19.2       -1.3
Oct '10              +10.2 +12.4        +15.7       +18.4       -14.9
Feb '11              +15.4 +17.3        +18.9       +21.7       -3.9


          Post &     Trans &   Renting & Hotels &   Financial   Other
          Telecoms   Storage   Business Rest‟s      Intermed    Services
Jun '10   +15.4      +11.4     +9.1      +12.0      +17.1       +9.8
Oct '10   +5.5       +17.0     +13.3     +16.7      +1.7        +9.6
Feb '11   +17.5      +32.0     +15.9     +17.4      +10.3       +7.5

				
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