KfW Research: SMEs head into autumn on a slightly sour note

• KfW ifo Business Climate Index dropped in September for the second consecutive month
• US policies are causing volatility in sentiment
• Unctainty around fiscal policy impetus is dampening economic recovery hopes

SME sentiment deteriorated for the second consecutive month in September, dropping by 2.9 points to -16.1 balance points. It fell by a more moderate 0.5 points among large enterprises. Thus, the sentiment upturn observed at the start of the year has stalled.

These are the findings of the KfW-ifo SME Barometer. It is a specific analysis by KfW Research of the ifo Institute’s business climate survey, differentiated by enterprise size classes.

September showed a continuation of the mixed picture from the previous month. Minor improvements in the indexes were seen in manufacturing and retail. The situation remained steady in the construction sector. However, a significant deterioration was observed in the wholesale and services sectors. These mood swings are surprising given that export expectations of small and medium-sized enterprises have generally improved noticeably on the back of the tariff agreement secured between the EU and the US. The current variations appear to reflect the ongoing uncertainties caused primarily by US policies.

Among large enterprises, business sentiment dropped for the first time this year. This development is the result of a deterioration in business expectations, which fell by 3.0 points. By contrast, situation assessments improved by 1.8 points.

“The initial hopes which businesses pinned on the new government appear to be gradually fading,”

said Dr Dirk Schumacher, Chief Economist of KfW Research.

“Uncertainty remains around the timing and magnitude of the fiscal impetus. The important thing is that measures aimed at boosting growth are implemented promptly.”

The current KfW-ifo SME Barometer can be downloaded from: KfW-ifo SME Barometer | KfW

KfW supports SMEs with a number of promotional programmes on behalf of the Federal Government. More information is available at We are strengthening the SME sector (German page).