KfW-ifo SME Barometer: SMEs enter the new year with a slight deterioration in sentiment

  • SME sentiment declines towards the end of the year
  • Retail dissatisfied with Christmas business
  • Large enterprises close 2015 in highest spirits

Frankfurt am Main, 29-12-2015 — /EuropaWire/ — The SMEs enter the new year with a slight deterioration in sentiment, according to the latest KfW-ifo SME Barometer. On balance, the sentiment of the smaller and medium-sized enterprises dropped by 1.4 points to 16.9 points in December. Both components of SME sentiment deteriorated slightly: the assessment of the current business situation dropped by 1.4 points and reached 24.4 balance points at the end of 2015. The expectations lost 1.6 points to 9.1 balance points.

“The minor setback in December does not question the upward trend of SME sentiment, which started more than one year ago,” comments Dr Jörg Zeuner, Chief Economist at KfW. Business at small and medium-sized companies continues to be strong, a clear majority of companies expects an improvement in business activities in the first half of 2016. “My concerns regarding the economic development in Germany are therefore extremely limited.”

The current downturn in SME sentiment originates mainly from the retail sector, which revised its sentiment downwards by 6.8 points in December, equivalent to nearly twice the average of monthly fluctuation, to 24.3 balance points. Given the continuing excellent conditions for private consumption, this development could come as a surprise: continuing employment growth together with a marked increase in nominal wages and a low inflation rate provides for a substantial increase in real purchase power, while the low interest rates make saving money comparatively unattractive.

Nevertheless, the lively spending culture prevailing for quite some time could have increased the expectations of the retail sector with regard to the point at which business is classed as good. The mild weather will also have contributed to retailers missing out on a strong Christmas business. Seasonal goods such as winter coats and boots do not sell very well at the moment. “In the light of this temporary weather effect, the decline in retail sentiment is understandable – and not a problem, provided it recovers soon,” says Zeuner.

The sentiment of large enterprises, most of them with international activities, has improved further in December. Their expectations are stable at 6.6 balance points, while their business assessment improved slightly by 0.5 points to 23.2 balance points. All in all, the slight improvement in sentiment of 0.3 points to 15.0 balance points at large enterprises is enough to close the year 2015 with the best sentiment in nineteen months. The confidence in a recovery of international demand, which this expresses, together with the upgrade in employment expectations for both company classes, increase the optimism with regard to a positive economic development in 2016.

“With real growth of an expected 1.7%, the German economy has shown a noticeably better development in 2015 than expected one year ago. We believe domestic demand will continue to be strong in 2016 and Germany will also benefit from a slight recovery in the emerging markets and a continued upswing in Europe. With our current forecast of 2.0% real growth, Germany could achieve the highest growth in five years,” according to Dr Jörg Zeuner.

The current KfW-ifo SME Barometer can be found at



Portrait Christine Volk
Christine Volk
Phone +49 69 74 31-38 67
Fax +49 69 74 31-32 66
eMail christine.volk@kfw.de




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