ifo Business Climate in Eastern Germany Improves (November 2023)

The ifo Business Climate Index for Eastern Germany rose slightly in November. The barometer of business sentiment for the regional economy in eastern Germany reached 90.7 points, up from 90.0 points in the previous month. Among the companies surveyed, both their assessments of the current situation and their business expectations improved somewhat.

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

In the eastern German service sector, the Business Climate Index fell a little in November. The service providers surveyed lowered both their assessments of the current situation and their business expectations slightly.

In eastern German trade, the Business Climate Index rose slightly in November. While the trend in wholesale was extremely positive compared to the previous month, retailers were more pessimistic about the future.

In eastern German construction, the business climate turned much brighter in November. The construction companies surveyed assessed their current business situation as considerably better than in October, and they were somewhat less pessimistic about their future business performance.

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

ifo Business Climate Eastern Germany

(Index, 2015 = 100, seasonally adjusted)

	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23	07/23	08/23	09/23	10/23	11/23
Climate	89.7	92.2	92.6	94.6	95.4	96.3	96.0	93.4	91.6	90.5	89.7	90.0	90.7
Situation	96.0	97.9	97.4	99.5	99.5	98.5	99.1	97.8	95.0	92.9	92.2	91.7	92.7
Expectations	83.8	86.8	88.0	90.0	91.4	94.1	92.9	89.3	88.3	88.2	87.3	88.3	88.7

Source: ifo Business Survey.
© ifo Institute

ifo Business Climate Eastern Germany by Sector

(Balances, seasonally adjusted)

	11/22	12/22	01/23	02/23	03/23	04/23	05/23	06/23	07/23	08/23	09/23	10/23	11/23
Eastern Germany	-6.5	-1.1	-0.2	4.1	5.7	7.8	7.1	1.6	-2.3	-4.7	-6.5	-5.9	-4.3
Manufacturing	-10.7	-2.7	-2.6	1.5	0.5	6.8	3.7	-4.7	-8.7	-11.4	-6.3	-7.1	-6.9
Service sector	3.4	6.6	8.7	12.9	17.9	17.9	17.3	14.3	10.8	7.3	3.6	6.0	5.0
Trade	-29.5	-28.2	-27.4	-21.0	-22.1	-21.3	-22.1	-23.0	-28.9	-29.1	-31.8	-26.6	-22.8
Construction	-22.4	-22.8	-21.5	-24.5	-14.0	-16.0	-16.4	-18.5	-20.6	-26.6	-31.6	-31.5	-25.5

Source: ifo Business Survey.
© ifo Institute

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

Chart: Business Situation and Expectations Eastern Germany by Sector, ifo Business Survey, November 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.