ifo Business Climate Index for Eastern Germany Rises Noticeably (April 2022)
Sentiment among companies in eastern Germany improved considerably once again in April. The ifo Business Climate Index for the entire regional economy rose from 92.8 to 96.5 points, driven by the marked rise in business expectations. Assessments of the current business situation remained largely in line with the previous month. Eastern German companies seem to have coped well with the initial shock of the Russian war of aggression.
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In eastern German manufacturing, the Business Climate Index took a slight dip in April. Assessments of the current situation improved markedly, even as business expectations for the coming six months saw a noticeable decline. Capacity utilization, which is measured at the beginning of each quarter, remained roughly constant at 84.2 percent (January: 84.0 percent).
In the eastern German service sector, sentiment surged upward. This was largely as a result of the strong increase in business expectations. Companies’ assessments of the current situation improved slightly as well. The easing of the coronavirus situation is probably also responsible for these developments.
In eastern German trade, the barometer of business sentiment cooled in April once more. The companies surveyed lowered their assessments of the current situation considerably, and the outlook for the coming six months was worse again as well.
In eastern German construction, the Business Climate Index plummeted again, as the companies surveyed massively scaled back both their assessments of the current situation and their business expectations.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/21 | 01/22 | 02/22 | 03/22 | 04/22 | |
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Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 01/21 | 02/21 | 03/21 | 04/21 | 05/21 | 06/21 | 07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/21 | 01/22 | |
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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.
