ifo Business Climate Eastern Germany: Index Falls Again (June 2023)

Sentiment among companies in eastern Germany saw a decidedly strong decrease in June. The ifo Business Climate Index for the entire regional economy fell to 93.3 points, down from 96.0 points in May. While the companies surveyed lowered their assessments of the current situation slightly, their outlook for the next six months worsened drastically.

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In eastern German manufacturing, the business climate cooled down significantly in June. The manufacturing companies surveyed assessed the business situation as somewhat less positive than in the previous month. At the same time, their outlook for the coming six months was dramatically worse.

Sentiment in eastern Germany’s service sector worsened slightly in June. Service providers’ assessments of the current situation declined a little. Their business expectations worsened marginally.

In eastern German trade, the barometer of business sentiment fell moderately in June. Compared to the previous month, the businesses surveyed gave marginally improved assessments of their current business. But at the same time, their outlook for the coming six months was slightly more negative.

In eastern German construction, the business climate was a touch cooler in June. The companies surveyed raised their overall assessments of the current situation somewhat, while their expectations darkened noticeably.

Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute

ifo Business Climate in Eastern Germany, June 2023

ifo Business Climate Eastern Germany

(Index, 2015 = 100, seasonally adjusted)

	06/22	07/22	08/22	09/22	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23
Climate	94.0	92.4	91.4	85.9	86.8	89.5	92.0	92.6	94.7	95.5	96.6	96.0	93.3
Situation	101.0	100.8	99.1	94.6	93.4	96.0	97.7	97.4	99.5	99.4	98.5	98.8	97.6
Expectations	87.4	84.7	84.2	78.1	80.7	83.5	86.6	88.0	90.2	91.7	94.7	93.3	89.2

Source: ifo Business Survey.
© ifo Institute

ifo Business Climate Eastern Germany by Sector

(Balances, seasonally adjusted)

	06/22	07/22	08/22	09/22	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23
Eastern Germany	3.2	2.7	-0.7	-2.9	-14.6	-12.7	-6.8	-1.5	-0.3	4.4	6.0	8.4	7.2
Manufacturing	-1.7	-9.6	-12.3	-22.8	-11.8	-12.1	-2.5	-2.7	2.3	1.4	7.3	5.6	-4.2
Service sector	13.4	11.3	7.6	-4.7	-5.8	3.4	6.3	8.6	12.8	17.8	18.0	16.9	13.9
Trade	-20.6	-22.3	-26.4	-38.9	-31.6	-29.5	-28.3	-27.4	-20.9	-21.9	-21.2	-22.0	-23.0
Construction	-12.0	-19.2	-16.6	-22.9	-26.6	-21.8	-23.1	-21.6	-23.6	-14.1	-16.0	-16.2	-18.1

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.