ifo Business Climate Eastern Germany: On Track for Recovery (June 2020)
In June 2020, there were stronger signs of recovery in the eastern German economy following the major slump in spring. The ifo Business Climate Index for the entire regional economy in eastern Germany jumped from 81.7 to 88.6 points. This was mainly attributable to the continuation of the strong upward trend in the survey participants’ expectations that began in the previous month. Meanwhile, assessments of the current situation by the eastern German survey participants are also on their way up again.
Download
Sentiment in eastern German manufacturing brightened considerably in June. While the survey participants’ assessments of their current business situation still declined slightly, they continued to raise their business expectations.
In the eastern German services sector, the ifo Business Climate Index saw a very significant climb, rising sharply for both the current situation and expectations. The increase in expectations was more pronounced than that for the assessments of the current situation.
The business climate in eastern German trade also brightened substantially. Both subindices surged upward. A striking development here is that the assessments of the current situation developed much more favorably than expected. The majority of the retailers surveyed said that they were once again optimistic about their current business situation in June.
In eastern German construction, the ifo Business Climate Index saw a strong uptick. While assessments of the current situation improved only slightly, business expectations rose sharply.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 06/19 | 07/19 | 08/19 | 09/19 | 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | |
| Climate | |||||||||||||
| Situation | |||||||||||||
| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 06/19 | 07/19 | 08/19 | 09/19 | 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | |
| Eastern Germany | |||||||||||||
| Manufacturing | |||||||||||||
| Service sector | |||||||||||||
| Trade | |||||||||||||
| Construction |
Source: ifo Business Survey.
© ifo Institute
The ifo Business Climate Eastern Germany is based on approx. 1,700 monthly survey responses from firms in manufacturing, construction, wholesale, and retail. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterize their situation as “good,” “satisfactory,” or “poor” and their business expectations for the next six months as “more favorable,” “unchanged,” or “more unfavorable.” The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor”; the balance value of the expectations is the difference of the percentages of the responses “more favorable” and “more unfavorable.” The business climate is a transformed mean of the balances of the business situation and the expectations. For the purpose of calculating the index values, the transformed balances are all normalized to the average of the year 2015.
