ifo Business Climate Eastern Germany Declines (December 2021)
Sentiment among companies in eastern Germany fell significantly in December. The ifo Business Climate Index for the entire regional economy continued to slide, falling to 96.0 points, down from 97.5 points in November. Participating companies reported a marked decline in their assessments of the current situation. At the same time, their expectations dropped somewhat compared to the previous month.
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In eastern German manufacturing, the business climate brightened a little in December. The industrial companies surveyed assessed both their current business and their outlook as somewhat better than in November. However, it appears that the pessimistic take on the new year will persist for a while yet.
In the eastern German service sector, the ifo Business Climate Index fell appreciably in December. The service providers surveyed lowered their overall assessments of the current situation considerably, while they scaled back their expectations for the coming six months noticeably. Pessimism about the first half of 2022 is rising.
In eastern German trade, sentiment deteriorated significantly in December. The subindices for retail and wholesale revealed opposing trends for situation and expectations. While assessments of the current situation were somewhat brighter among wholesalers, among retailers it was the business expectations that rose marginally. Overall, however, the climate declined in both areas.
In eastern German construction, the business climate was a good deal cooler in December. The construction businesses surveyed rated their current business somewhat less positively as in the previous month. At the same time, their outlook for the coming months was noticeably more negative.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/21 | |
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/21 | |
| Eastern Germany | |||||||||||||
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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.
