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KfW-ifo SME Barometer: Autumn blues hit small and medium-sized enterprises

Press Release from 2018-12-03 / Group, KfW Research

  • SME business climate dips noticeably on a high level
  • Situation assessments remain very positive despite decline, expectations are less optimistic
  • Sentiment brightens cautiously among large enterprises
  • Germany’s upswing continues unexcitedly

Sentiment among German SMEs cooled noticeably in November after a surprisingly stable October. Thus, with a one-month delay, small and medium-sized enterprises partly followed the strong decline in large enterprises’ business sentiment, which was mostly driven by expectations that recovered slightly again in November. The current KfW-ifo SME Barometer shows, specifically, that SME business confidence fell by 3.4 points to now 14.5 balance points.

In a long-term comparison, however, this is still a very good result, thanks especially to the business situation component. It is true that SMEs rated their current business situation 2.6 points worse than in October. But the current level of 26.5 balance points is still among the top 10 per cent of situation assessments since the beginning of the time series in January 2005. SMEs’ business expectations fell by a significant 4.0 points but, at 3.4 balance points, still remain clearly above the zero line which reflects the long-term average.

Among large enterprises, business sentiment showed cautious improvement in November after plunging in the previous month. Situation assessments gained a minimal 0.2 points to reach 16.9 balance points. At the same time, expectations improved by a modest 0.6 points to now -1.4 balance points. Altogether, large enterprises’ business sentiment thus picked up by a moderate 0.4 points to 7.3 balance points. As such, that is not a bad result but clearly less than in the SME sector. The wide sentiment gap that has widened since last spring to the detriment of large export-oriented enterprises shows that it is the slightly sputtering global economy and, most of all, the many international uncertainties such as US protectionism, Brexit and Italy’s row with the EU over its national budget that are currently weighing on economic performance. Since they are more strongly geared to international markets, large enterprises are particularly sensitive and feel such influences early. SMEs, which often tend to be more indirectly affected by external developments through their ties to suppliers and service providers well as demand effects, react accordingly with a time lag.

“It may be typical for SMEs to suffer the autumn blues at this time of year, although they have been hit slightly later than the large enterprises. But this is not a suitable indicator of a long and frosty economic winter”, said Dr Jörg Zeuner, Chief Economist of KfW. “The levels of almost all indicators of the KfW-ifo SME Barometer are much too good for this, and other hard monthly economic indicators such as incoming orders in the manufacturing sector and automobile production started the fourth quarter with a strong tailwind as well. The boom years with real growth rates of 2% or more, such as 2017, are over for now. But Germany is still set to grow at the rate of its growth potential and thus rather unexcitedly – at least if the many risks at European and international level remain halfway manageable.” KfW Research predicts economic growth of 1.6% for the current year and for 2019.

The current KfW-ifo SME Barometer can be downloaded from:
www.kfw.de/mittelstandsbarometer (available in German only)


Portrait Christine Volk


Christine Volk


+49 69 74 31 38 67


+49 69 74 31 32 66