ifo Business Climate Index Eastern Germany Rises Sharply (May 2021)
The mood of eastern German companies saw a powerful upswing in May. The ifo Business Climate Index for the entire regional economy climbed to 99.2 points from 95.8 points in April. Compared to the previous month, expectations of the companies surveyed surged and their assessments of the current situation also improved significantly. Developments among service providers were particularly positive.
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In eastern German manufacturing, the business climate brightened slightly in May, mainly because industrial companies’ business was much better. Expectations for the future, however, were less optimistic than before.
In the eastern German service sector, the ifo Business Climate Index saw a very significant climb in May. The service providers surveyed raised their overall assessments of the current situation slightly, while their expectations rose steeply.
In eastern German trade, sentiment remained constant. This is the only area that was still pessimistic in May. Although the business climate improved further in retail, it cooled slightly in wholesale. The development in retail was driven by better assessments of the situation, while lower expectations prevailed in wholesale.
In eastern German construction, the business climate was a touch cooler in May. The construction businesses surveyed rated their current business less positively, but raised their expectations somewhat.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | |
| Climate | |||||||||||||
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 05/20 | 06/20 | 07/20 | 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | |
| Eastern Germany | |||||||||||||
| Manufacturing | |||||||||||||
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| 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.
