ifo Business Climate Eastern Germany Takes a Considerable Downturn (July 2022)
Sentiment among companies in eastern Germany cooled significantly in July. The ifo Business Climate Index for the entire regional economy fell to 92.1 points, down from 94.1 points in June. The survey participants’ assessments of their current situation declined slightly, and their outlook became noticeably more negative.
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In eastern Germany’s manufacturing sector, the ifo Business Climate Index slid steeply in July. The companies surveyed revised their assessments of the current business situation considerably downward, while business expectations for the coming six months plummeted.
The mood in eastern Germany’s service sector cooled somewhat in July, while assessments of the current situation fell slightly. Companies here revised their business expectations noticeably downward from those of the previous month.
In eastern German trade, the barometer of business sentiment fell slightly in July. The companies surveyed assessed their current business as better than in the previous month, although their outlook for the coming six months worsened markedly.
In eastern German construction, the business climate turned much cooler in July. Assessments of the current situation by the participating construction companies took a nosedive, and business expectations declined significantly.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/22 | 01/22 | 02/22 | 03/22 | 04/22 | 05/22 | 06/22 | 07/22 | |
Climate | |||||||||||||
Situation | |||||||||||||
Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
07/21 | 08/21 | 09/21 | 10/21 | 11/21 | 12/22 | 01/22 | 02/22 | 03/22 | 04/22 | 05/22 | 06/22 | 07/22 | |
Eastern Germany | |||||||||||||
Manufacturing | |||||||||||||
Service sector | |||||||||||||
Trade | |||||||||||||
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.