ifo Business Climate Eastern Germany Rises Once More (February 2021)
Sentiment among companies in eastern Germany improved markedly in February. The ifo Business Climate Index for the entire regional economy rose to 90.4 points from 88.9 points in January. The survey participants’ assessments of the current situation and their expectations alike were better than in January. Of the two, the improvement in their assessments of the current situation was more pronounced.
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In eastern German manufacturing, the upward trend of last month continued and the business climate brightened significantly in February. Manufacturers assessed their current business as slightly better than in the previous month, and they raised their expectations for the next six months considerably.
Following last month’s slump, the ifo Business Climate Index recovered a little in the eastern German service sector. While assessments of the current situation were noticeably better in February, expectations rose slightly.
The mood in eastern German trade improved appreciably, with the business climate heading upward for both wholesale and retail trade. This was mainly attributable to decidedly better expectations; assessments of the current situation continued their slight downward trend.
In eastern German construction, the business climate brightened notably in February. The construction companies surveyed assessed both their current business and their outlook as perceptibly better than in the previous month.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
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Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
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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.
