ifo Business Climate Index for Eastern Germany Slips Slightly (June 2024)

The ifo Business Climate Index for Eastern Germany fell slightly in June. The barometer of business sentiment for the regional economy in eastern Germany declined to 92.4 points, down from 92.7 points in May. The eastern German companies surveyed provided assessments of their business situation that were somewhat worse than the previous month and lowered their business expectations slightly. The upward trend of recent months has not continued.

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In eastern German manufacturing, the business climate cooled down a little in June. The companies surveyed assessed their current business situation as being somewhat less good than in the previous month. Their expectations for future business development fell marginally.

The ifo Business Climate Index rose slightly in the eastern German service sector in June. Compared to the previous month, the service providers surveyed raised their assessments of the current situation slightly and their business expectations for the coming months.

In eastern German trade, the business climate was perceptibly gloomier in June. Both retailers and wholesalers in eastern Germany reported poorer business than in the previous month. The business situation for retailers deteriorated slightly, while that for wholesale worsened considerably. The outlook for the retail sector deteriorated somewhat, while the outlook for the wholesale trade rose slightly.

In eastern German construction, the business climate turned a little brighter in June. The construction companies surveyed stated that their business situation was now a little worse than in May. At the same time, they raised their expectations for future business significantly.

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

ifo Business Climate Eastern Germany

(Index, 2015 = 100, seasonally adjusted)

	06/23	07/23	08/23	09/23	10/23	11/23	12/23	01/24	02/24	03/24	04/24	05/24	06/24
Climate	93.3	91.7	90.6	89.7	90.1	90.7	88.8	89.0	88.6	90.3	92.2	92.7	92.4
Situation	97.6	95.2	93.0	92.4	91.8	92.8	90.8	90.7	90.6	91.8	92.4	93.1	92.8
Expectations	89.1	88.4	88.3	87.1	88.3	88.6	86.7	87.4	86.6	88.7	92.1	92.4	91.9

Source: ifo Business Survey.
© ifo Institute

ifo Business Climate Eastern Germany by Sector

(Balances, seasonally adjusted)

	06/23	07/23	08/23	09/23	10/23	11/23	12/23	01/24	02/24	03/24	04/24	05/24	06/24
Eastern Germany	1.2	-2.1	-4.5	-6.5	-5.6	-4.3	-8.5	-7.9	-8.9	-5.2	-1.1	0.1	-0.7
Manufacturing	-4.3	-7.8	-10.3	-5.3	-6.3	-6.5	-11.7	-7.5	-9.7	-0.7	-6.8	-2.8	-3.9
Service sector	13.9	11.1	7.5	4.1	6.2	5.2	0.7	0.0	-0.6	1.3	6.8	7.8	9.9
Trade	-23.1	-28.9	-29.2	-31.9	-26.7	-22.9	-29.9	-32.5	-32.9	-23.7	-23.6	-18.4	-22.4
Construction	-19.9	-21.0	-27.3	-31.9	-31.9	-26.3	-30.9	-33.9	-30.7	-31.9	-25.4	-23.0	-22.7

Source: ifo Business Survey.
© ifo Institute

Chart: ifo Business Climate Eastern Germany, ifo Business Survey, June 2024

Chart: Business Situation and Expectations Eastern Germany by Sector, ifo Business Survey, June 2024

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.