ifo Business Climate Eastern Germany Treads Water (May 2022)
The mood of eastern German companies held more or less steady in May. The ifo Business Climate Index for the entire regional economy hovered at 94.5 points. The survey participants’ assessments of their current situation improved considerably, even as they revised their outlook markedly downward. Such strongly contrasting developments are likely due to the easing of the coronavirus situation and the ongoing war in Ukraine.
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In eastern Germany’s manufacturing sector, the ifo Business Climate Index rose perceptibly in May. Assessments of the current business situation declined markedly, while expectations for the coming six months surged upward.
The mood in eastern Germany’s service sector clouded over a little, mainly due to the steep decline in business expectations. At the same time, companies’ assessments of the situation saw strong improvement.
In eastern German trade, the barometer of business sentiment rose significantly. The companies surveyed raised both their assessments of current business and their outlook appreciably.
In eastern German construction, the Business Climate Index recovered noticeably in May. While the companies surveyed reported slightly less favorable assessments of their current situation, they expect business to improve significantly in the coming months.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
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Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
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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.
