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KfW-ifo SME Barometer: SME business climate defies trade conflict

Press Release from 2018-07-06 / Group, KfW Research

  • Business climate drops only slightly in June
  • Large enterprises watch political crises with concern
  • Sectoral comparison shows few upward outliers

Sentiment among Germany’s small and medium-sized enterprises remained nearly unchanged in June. Their business climate fell by a mere -0.3 points to 13.8 balance points. It shows that they are so far largely unimpressed with the latest escalation in the trade conflict with the US. Business expectations rose 0.2 points to 2.5 balance points. At 25.7 balance points, German SMEs still rate their current business situation as outstanding, despite a renewed drop by -1.0 points. The mood among large enterprises is completely different. In June their business climate fell by a significant -3.0 points to 10.3 balance points. They rated their business situation -2.6 points lower, at 24.1 balance points. Their expectations are now even below average, decreasing by -2.2 balance points.

“The assessments of German SMEs and large enterprises are increasingly diverging. Large enterprises have reason to be increasingly worried about the political confrontation with the US. The time for them to make strategic decisions about production locations or restructuring value chains is drawing closer and closer. Here lies the real danger of the trade dispute”, said Dr Jörg Zeuner, Chief Economist of KfW Group. “SMEs, in turn, still have their sights on the good domestic economy for now”, Zeuner observed, adding: “A deterioration in sentiment in the coming months would come as no surprise to me amid the many political challenges facing Germany and the European Union. After all, the conflict over refugee policy within the federal government did not yet play a role at the time of the survey.”

The sectoral comparison shows continued outstanding sentiment in the construction industry. Confidence levels are down slightly among small and medium-sized construction firms. The services sector is experiencing an opposite trend, with SMEs gaining confidence. Large service providers reported a significant slump in sentiment. Large retailers and wholesalers, always susceptible to fluctuations, reported average negative variations. Small, medium-sized and large manufacturers saw their business climate deteriorate marginally.

The current KfW-ifo SME Barometer can be downloaded from www.kfw.de/mittelstandsbarometer


Portrait Wolfram Schweickhardt


Wolfram Schweickhardt


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