ifo Business Climate East Germany Falls (October 2020)
Sentiment among companies in Saxony deteriorated noticeably in October. The ifo Business Climate Index for the region’s economy as a whole fell from 95.7 to 94.0 points. This is mostly due to a clear drop in business expectations. Assessments of the current situation also fell slightly.
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In eastern German manufacturing, the business climate was marginally gloomier. While business expectations for the coming six months worsened markedly, assessments of the current situation continued to improve. Companies were able to increase their capacity utilization from 76.5 percent to 78.7 percent.
There was a significant fall in the ifo Business Climate Index for the eastern German service sector. This is primarily attributable to the drop in business expectations. However, assessments of the current situation also declined somewhat.
In eastern German trade, sentiment deteriorated. The companies surveyed lowered their assessments of the current situation considerably. Their outlook for the coming six months also worsened slightly.
Sentiment in eastern German construction continued to decline. The construction companies surveyed lowered their assessments of the current situation appreciably, but their business expectations for the coming six months were more or less unchanged.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | |
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | |
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| 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.
