ifo Business Climate Index for Eastern Germany Slips Slightly (August 2021)
Sentiment among companies in eastern Germany cooled a bit in August. The ifo Business Climate Index for the entire regional economy fell to 101.2 points, down from 101.5 points in July. Compared to the previous month, companies’ assessments of the current situation rose noticeably even as their expectations plummeted.
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In eastern German manufacturing, the business climate cooled significantly in August. While current business was rated slightly better, industrial companies lowered their expectations markedly for the coming months.
The ifo Business Climate Index climbed a little in the eastern German service sector in August. The service providers surveyed raised their overall assessments of the current situation again substantially, while they considerably lowered their expectations for the coming six months.
The mood in eastern German trade worsened somewhat in August: in retail it was mainly the outlook that was rated less favorably, while in wholesale it was the assessment of current business that fell sharply.
In eastern German construction, the business climate cooled off slightly again in August. The construction businesses surveyed rated their current business somewhat less positively, although they also raised their expectations to a certain extent compared to the previous month.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Germany
(Index, 2015 = 100, seasonally adjusted)
| 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | |
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Germany and by Sector
(Balances, seasonally adjusted)
| 08/20 | 09/20 | 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | |
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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.
