German companies start hiring on decline in bankruptcies

With German industrial optimism currently at its highest level since reunification in the early 1990s, companies are in hiring mode and the number of corporate failures is on the decrease, new surveys showed on June 12.
In a poll of more than 20,000 companies by the DIHK federation of German chambers of commerce, nearly one company in four said it planned to hire more people in the next 12 months.
Around 23 percent of the companies polled said they planned to hire more employees in the next year, compared with 21 percent at the start of 2007, DIHK said. Only 11 percent of the companies surveyed said they intended to reduce their headcount, compared with 13 percent at the start of the year. And 66 percent of companies said they would maintain their workforce at current levels.
"The economic upturn in Germany has entered a third phase," said DIHK's chief economist Axel Nitschke. "After exports and investment, private consumption is now also turning into an additional growth engine." "The German, European and global economies have rarely been so stable," Nitschke said. "Even rising raw material prices and the strong euro have so far failed to jeopardise the robust growth."
The German economy was also able to digest the sharp increase in value-added or sales tax (VAT) at the start of 2007, which many observers had feared would slam the brakes on growth in the eurozone's biggest economy, DIHK found. The federation was therefore upgrading its forecast for German growth this year to 2.8 percent, the same rate of growth as in 2006, it said. Last autumn, DIHK had been pencilling in gross domestic product (GDP) growth of just 1.5 percent in 2007, largely in anticipation of the so-called VAT effect. Separate data compiled by the business information group Creditreform showed that the number firms that went bust in the first half of this year declined by 14 percent to 14,100.
And the ZDH federation of skilled trades said it expected employment in the sector, which is dominated by small and medium-sized companies, to increase for the first time in seven years.