ifo Business Climate in Eastern Germany Declines Sharply (October 2021)
Sentiment among companies in eastern Germany fell sharply in October. The ifo Business Climate Index for the entire regional economy fell to 98.6 points, down from 101.1 points in September. Participating companies reported a slight decline in their assessments of the current situation. At the same time, their expectations tumbled compared to the previous month. Meanwhile, companies are once again taking a pessimistic view of their future.
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In eastern German manufacturing, the business climate cooled significantly again in October. The negative trend of recent months continues unabated. Industrial companies rated their current business much less positively and lowered their expectations noticeably for the coming months.
In the eastern German service sector, there was a massive plunge in sentiment in October. The service providers surveyed lowered their overall assessments of the current situation slightly, while their expectations for the coming months plummeted.
The ifo Business Climate Index in eastern German trade dropped somewhat in October. While both subindices took a downturn in retail, assessments of the current situation improved significantly in wholesale compared to the previous month.
In eastern German construction, the business climate was a touch cooler in October. The construction businesses surveyed rated their current business considerably less positively than in the previous month, but they raised their expectations for the next few months somewhat.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | |
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 10/20 | 11/20 | 12/20 | 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | |
| 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.
