ifo Business Climate East Germany Fell (January 2021)
Sentiment among companies in eastern Germany cooled off noticeably in January. The ifo Business Climate Index for the entire regional economy fell from 92.4 to 88.7 points. The survey participants’ assessments of the current situation and their expectations alike deteriorated significantly compared to December.
Download
In eastern German manufacturing, the business climate brightened slightly in January. Manufacturers assessed their current business as just as good as in the previous month, and they raised their outlook for the coming six months somewhat.
The ifo Business Climate Index took a major dip in the eastern German service sector. Assessments of the current situation and business expectations both saw a steep decline.
In eastern German trade, sentiment plummeted. This was particularly noticeable in the assessments of the current situation. In wholesale, survey participants’ assessments and expectations were more positive than in retail.
The mood in eastern Germany’s construction industry clouded over heavily in January. The businesses surveyed adjusted their assessments of the current situation and their expectations massively downward.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | |
| Climate | |||||||||||||
| Situation | |||||||||||||
| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | |
| 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.
