KfW-ifo SME Barometer: the business climate in Germany during April at the record level of 24.9 balance points

  • Improved business situation and expectations drive SME business climate to record level
  • Large enterprises are much more satisfied with their present business situation but less optimistic
  • Economic outlook for Germany continues to brighten

Frankfurt am Main, 05-May-2017 — /EuropaWire/ — The KfW-ifo SME Barometer is providing more and more reasons to be upbeat about the economy. In April the business climate of small and medium-sized enterprises in Germany jumped 4.4 points to the record level of 24.9 balance points – the highest ever recorded for the indicator, which was introduced in 1991. Both business expectations (up 3.3 points to 11.7 balance points) and situation assessments (up 5.7 points to 38.4 balance points) improved greatly.

The business climate among large enterprises improved in April as well, by 1.7 points to 22.2 balance points. The improvement here, however, is exclusively due to their much better assessments of the current business situation, which soared much higher than among SMEs, by 8.5 points to 38.1 balance points. The expec¬tations indicator, in turn, corrected its extraordinarily strong increase of March by around half to what is still a decent level (-4.5 points to 6.9 balance points).

Retail trade was the most prominent of the domestically oriented sectors in April. The very strong improvement of the business climate among large retailers after four relatively weak months (+15.3 points to 18.6 balance points) by far eclipses the increase among SME retailers, which in itself is already impressive (+7.8 points to 26.1 balance points). Special factors are partly responsible for this rise. Unlike last year, the Easter holidays were in March instead of April, which the seasonal adjustment procedure can only partly account for. A technical consolidation of the retail climate will therefore probably take place as early as in the coming month. But the conditions for private consumption will remain good for the foreseeable future, as indicated by, in particular, strong increases in employment expectations among SMEs and large-scale enterprises.

“SME business sentiment reached an all-time high in April. Political risks appear to be increasingly fading into the background while the domestic economy, which is particularly important for SMEs, keeps humming along”, commented Dr Jörg Zeuner, Chief Economist of KfW. “The very high level of the indicator for the business situation among both SMEs and large enterprises gives reason to hope for dynamic and broad-based economic growth in the second quarter as well, after what has probably been strong growth in the first quarter already. Prospects are also improving for subsequent quarters. An upward revision of KfW’s previous economic forecasts for Germany from 1.4% for both 2017 and 2018 is likely, even if the imponderables in the relationship with the USA and the UK will continue to smoulder in the background for quite some time. It is too early to give the all-clear, but not too early for optimism. As risks fade, businesses’ investment backlog should start to dissolve and provide additional economic impetus”, said Zeuner.

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


Ms. 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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