Ifo: East German economy off to a slow start to the year

The mood in the eastern German economy deteriorated slightly in January. According to the Ifo Institute in Dresden, the business climate index for eastern Germany fell slightly from 90.1 points in December to 89.8 points in January. While companies assessed their current business situation slightly better, expectations for the coming months were slightly more pessimistic.

Mood in industry much more upbeat

The business climate in the manufacturing sector brightened noticeably in January. The industrial companies surveyed assessed their current situation as significantly better than in the previous month. At the same time, they again revised their expectations for the coming months slightly downwards.

Service providers significantly more pessimistic

In the service sector, however, the mood cooled noticeably. Companies were slightly less satisfied with the current business situation than in December and noticeably lowered their expectations for the coming months.

Mixed picture in retail

The business climate in eastern German retail also deteriorated slightly overall. While wholesalers assessed the current situation much better and raised their expectations slightly, retailers assessed current business slightly worse and were much more pessimistic about the future.

Construction industry slightly more confident

The business climate improved slightly in the main construction industry. Construction companies assessed their current situation as slightly worse than in the previous month, but at the same time were slightly more optimistic about the coming months.

The Ifo business climate for eastern Germany is based on around 1.700 monthly reports from companies in industry, the service sector, trade and construction and is regarded as an important early indicator for economic development.