Sentiment among German small and medium-sized enterprises (SMEs) showed little change in April, following a significant improvement in March. The KfW-ifo SME Barometer rose by only 0.2 points to -17.4 balance points, remaining below the long-term average zero line. The construction sector was the only area where SMEs displayed increased optimism.
Businesses assessed their current situation more favorably than in the previous month, marking the most positive outlook since August of last year. However, expectations for the next six months declined.
Dr Klaus Borger, an economist at KfW Research, noted that "the scrapping of the debt brake raised hopes of strong fiscal impetus in March and led to a surge in expectations." He added that "in April, the escalating trade conflict already extinguished this new hope, at least in part."
KfW evaluates data from ifo Institute's economic surveys for its SME Barometer, categorizing results by company size and main economic sectors.
Large enterprises experienced a slightly stronger sentiment improvement than SMEs in April, with an increase of 1.0 points to -23.2 balance points. This was mainly due to improved sentiment among service providers and retailers. Despite this improvement, large enterprises remained pessimistic about future prospects compared to the previous month.
Export-oriented large manufacturers saw business sentiment drop by 2.4 points to -35.1 balance points amid deep concerns over escalating tariff conflicts. Their export expectations fell sharply by 11.8 points to -18.8 balance points—a decline 3.1 times greater than typical monthly variations—while SME manufacturers experienced a drop nearly three times as steep.
Dr Borger remarked that "businesses in Germany are vacillating between hope and fear," noting that "the changes in the business climate vary strongly between economic sectors but also between SMEs and large enterprises within one economic sector." He described this as typical for an economy seeking direction.
KfW offers various promotional programs supporting SMEs on behalf of the Federal Government.