ifo Business Climate Eastern Germany Continues Downward Trend (November 2020)
Sentiment among companies in eastern Germany deteriorated further in November in a continuation of the downward trend that began in October. The ifo Business Climate Index for the region’s economy as a whole fell from 93.9 to 92.1 points. Business expectations and assessments of the current situation declined to the same extent.
Download
In eastern German manufacturing, the business climate brightened notably. Business expectations for the coming six months rose markedly, while assessments of the current situation improved a little.
There was a major fall in the ifo Business Climate Index for the eastern German service sector. This was primarily due to a precipitous drop in assessments of the current situation. Business expectations for the coming six months also became much more pessimistic.
In eastern German trade, sentiment deteriorated further, although while the companies surveyed slashed their business expectations, they raised their assessments of the current situation substantially. In wholesale, this contrast between the current situation and expectations was particularly conspicuous.
The mood in eastern Germany’s construction industry rose a little in November. The companies surveyed raised their overall assessments of the current situation perceptibly, while business expectations for the coming six months fell slightly.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | |
| Climate | |||||||||||||
| Situation | |||||||||||||
| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | |
| 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.
