ifo Business Climate Index for Eastern Germany Stops Falling (December 2020)
Sentiment among companies in eastern Germany improved a little in December, bringing to an end the downward trend that began in October. The ifo Business Climate Index for the entire regional economy rose from 92.1 to 92.4 points. While survey participants’ assessments of their current situation were decidedly better, their business expectations dimmed somewhat.
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In eastern German manufacturing, the business climate cooled marginally in December. Manufacturers assessed their current business as slightly better than in the previous month, but they revised their outlook for the coming six months significantly downward.
The ifo Business Climate Index climbed a little in the eastern German services sector, a change largely attributable to the rise in assessments of the current situation. Expectations for the coming six months were somewhat gloomier.
In eastern German trade, sentiment was marginally better. Assessments of the current situation and business expectations both improved slightly. While the business climate rose for wholesalers, it fell for retailers.
The mood in eastern Germany’s construction industry clouded over a little in December. The companies surveyed raised their overall assessments of the current situation perceptibly, but at the same time their business expectations for the coming six months fell markedly.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 12/19 | 10/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | |
| Climate | |||||||||||||
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 12/19 | 10/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | |
| 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.
