ifo Business Climate Index Saxony Sees Steep Decline (June 2023)

The ifo Business Climate Index for Saxony fell sharply in June. The barometer of business sentiment in Saxony’s economy slipped from 99.4 points in May to 94.2 points in June. The Saxony-based companies surveyed assessed their current business situation as perceptibly worse than in the previous month and scaled back their business expectations considerably.

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In Saxony’s manufacturing, the business climate deteriorated greatly in June. Although the manufacturers surveyed were only slightly less satisfied with their current business situation than in the previous month, they now expect business to worsen significantly in the coming months.

In the Saxon service sector, the business climate also cooled off substantially. Service providers in Saxony reported their business was much worse than in the previous month and were noticeably more pessimistic about how their business is developing.

In Saxony’s trade, the ifo Business Climate Index saw a clear drop. The Saxon companies surveyed assessed their business situation as only somewhat worse than in the previous month. Retailers were slightly skeptical about the months ahead, while wholesalers expected business to deteriorate considerably.

The business climate for construction in Saxony worsened a bit in June. Compared to their responses in May, companies’ current assessments as well as their expectations were somewhat worse.

Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute

ifo Business Climate in Saxony, June 2023

ifo Business Climate Saxony

(Index, 2015 = 100, seasonally adjusted)

	06/22	07/22	08/22	09/22	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23
Climate	94.8	93.5	91.6	87.8	89.3	91.8	93.8	93.6	95.5	96.9	99.2	99.4	94.2
Situation	103.3	103.2	100.5	97.7	96.9	98.8	100.5	99.5	102.0	101.3	101.9	102.2	99.8
Expectations	87.0	84.7	83.6	78.9	82.3	85.4	87.5	87.9	89.5	92.7	96.5	96.7	88.8

Source: ifo Business Survey.
© ifo Institute

ifo Business Climate Saxony by Sector

(Balances, seasonally adjusted)

	06/22	07/22	08/22	09/22	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23
Saxony	5.0	2.2	-1.8	-10.1	-6.9	-1.3	2.8	2.4	6.6	9.6	14.5	15.1	3.7
Manufacturing	2.4	-3.3	-8.8	-10.5	-13.1	-11.3	0.5	1.6	-0.2	3.2	10.6	14.3	-1.9
Service sector	19.6	12.5	4.8	-3.7	4.3	13.4	14.5	13.5	20.5	25.2	28.3	30.9	20.6
Trade	-24.7	-22.4	-23.3	-37.9	-26.8	-24.4	-21.4	-26.8	-18.2	-25.0	-19.1	-16.7	-23.2
Construction	-7.8	-16.4	-18.0	-21.7	-30.8	-20.3	-19.8	-19.3	-21.6	-13.6	-12.6	-14.8	-18.2

Source: ifo Business Survey.
© ifo Institute

The ifo Business Climate for Saxony is based on approx. 500 monthly survey responses from businesses in manufacturing, the service sector, trade, and construction. Companies are asked to give their assessments of the current business situation and their expectations for the next six months. They can describe their situation as “good,” “satisfactory,” or “poor” and their business expectations for the next six months as “more favorable,” “unchanged,” or “less favorable.” The balance value of the current business situation is the difference in the percentage shares of the responses “good” and “poor”; the balance value of the expectations is the difference in the percentage shares of the responses “more favorable” and “less favorable.” The business climate is a transformed mean of the balances of the business situation and the expectations. To calculate the index values, the transformed balances are all normalized to the average for the year 2015.