ifo Business Climate Eastern Germany Treads Water (October 2023)

The ifo Business Climate Index for eastern Germany rose minimally in October. The barometer of business sentiment for the regional economy in eastern Germany improved by 0.1 point to 89.9 points. While the eastern German companies surveyed assessed their current situation as slightly worse, they also raised their business expectations a little.

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In eastern German manufacturing, the business climate cooled marginally in October. Although the manufacturers surveyed reported noticeably worse business than in the previous month, they expected somewhat better business in the coming months than in September.

The ifo Business Climate Index rose slightly in the eastern German service sector in October. The service providers surveyed raised both their assessments of the current situation and their business expectations somewhat.

In eastern German trade, the business climate improved noticeably overall in October. Compared with the previous month, the retail businesses surveyed in eastern Germany lifted both their assessments of the current situation and their expectations sharply. By contrast, eastern German wholesalers reported slightly worse business than in September and lowered their business expectations minimally.

In eastern German construction, the Business Climate Index deteriorated marginally in October. Although the construction companies surveyed assessed their current business situation as slightly worse than in September, they were somewhat less pessimistic about their future business performance than in the previous month.

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

ifo Business Climate Eastern Germany

(Index, 2015 = 100, seasonally adjusted)

	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23	07/23	08/23	09/23	10/23
Climate	86.8	89.7	92.1	92.5	94.6	95.3	96.4	96.1	93.5	91.6	90.5	89.8	89.9
Situation	93.3	96.2	97.8	97.4	99.4	99.5	98.5	99.0	97.8	95.0	92.9	92.2	91.7
Expectations	80.8	83.7	86.8	87.9	89.9	91.3	94.2	93.3	89.4	88.2	88.1	87.5	88.1

Source: ifo Business Survey.
© ifo Institute

ifo Business Climate Eastern Germany by Sector

(Balances, seasonally adjusted)

	10/22	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23	07/23	08/23	09/23	10/23
Eastern Germany	-12.7	-6.4	-1.2	-0.3	4.0	5.6	7.9	7.4	1.7	-2.5	-4.8	-6.2	-6.0
Manufacturing	-11.2	-11.8	-2.7	-2.6	1.6	0.7	7.1	3.9	-4.3	-8.4	-11.1	-6.4	-7.4
Service sector	-6.2	3.8	6.5	8.7	12.9	17.8	17.9	17.4	14.2	10.7	7.2	3.5	5.9
Trade	-31.4	-29.6	-28.2	-27.4	-21.0	-22.1	-21.3	-22.1	-23.0	-28.9	-29.1	-31.8	-26.6
Construction	-26.6	-21.5	-22.9	-21.5	-24.6	-14.0	-15.9	-16.3	-18.4	-20.5	-26.8	-31.9	-32.0

Source: ifo Business Survey.
© ifo Institute

Chart: ifo Business Climate in Eastern Germany, ifo Business Survey, October 2023

Chart: Business Situation and Expectations Eastern Germany by Sector, ifo Business Survey, October 2023

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.