Ifo Institute: Business climate in the East continues to cool down

The mood in the East German economy continues to deteriorate. The business climate index for eastern Germany fell noticeably from 90.1 to 88.2 points between July and August, according to the ifo Institute in Dresden. The companies surveyed assessed both the current situation and their business expectations for the coming months as significantly worse than in the previous month.

According to the institute, there was an improvement in the economic climate in the manufacturing sector in August. Industrial companies rated their current economic situation significantly better than in July. However, their expectations for future business development fell slightly.

Service sector in crisis

In contrast, the mood in the eastern German service sector deteriorated sharply. The service companies surveyed reportedly rated their current business significantly worse. Their expectations for the coming months were also noticeably more pessimistic.

In the retail sector, the climate indicator remained at the previous month's level. In wholesale, the business situation improved slightly, while it deteriorated somewhat in retail. Business expectations improved slightly compared to the previous month in both wholesale and retail, according to the institute.

Construction industry remains skeptical

The mood in the construction industry fell slightly. The construction companies surveyed assessed their business situation as worse than in July and were also more pessimistic about the future.

The Ifo Business Climate East Germany is based on around 1,700 reports from companies. Every month, the survey asks about the current business situation and expectations for the next six months.