Recovering sentiment among SMEs is faltering

• SME business climate slightly worse
• Expectations stable, business assessment somewhat less favourable
• Moderate upswing not in jeopardy

The tentative recovery in sentiment among SMEs that started back in March is already faltering yet again. As reflected by the KfW-ifo SME Barometer, the SME business climate deteriorated slightly in April by 0.6 points to 12.1 balance points – but this was only due to the less favourable assessments of the current business situation compared with the previous month. Despite having dipped 1.5 points to 23.3 balance points, however, they continue to remain at the high level they have held for more than nine months. The business expectations of small and medium-sized enterprises stagnated in April (+0.1 points) and, at 0.8 balance points, continue to hover only just above the long-term average.

Sentiment among large enterprises in April is hardly any different, albeit at a much lower level. While their business expectations picked up by 2.4 points – which is a more pronounced increase than in the SME sector – they are still falling short of what is needed to prevent the fourth negative monthly result in a row (-2.2 balance points). Business assessments are down 2.9 points at 15.5 balance points. All in all, business climate among large enterprises remains virtually unchanged (-0.1 points to 6.7 balance points).

“While the April result of the KfW-ifo SME Barometer indicates solid economic development in Germany, at the same time it suggests there is no further increase in dynamism,” commented Dr Jörg Zeuner, KfW Group’s Chief Economist. “The lingering economic and political risks in the European and global environment are generating a downward spiral that should not be underestimated. At the same time, reliable domestic demand and some more positive news again – such as the strong order intake in March that was reported early today – are creating enough momentum to prevent another slump in business climate. So the moderate upswing is not in jeopardy, but enterprises are lacking a stronger signal on direction for more to be achieved.”

The current KfW-ifo SME Barometer can be viewed at

www.kfw.de/mittelstandsbarometer