SMEs in Germany experienced a decline in business sentiment for the second month in a row this September, according to the latest KfW-ifo SME Barometer. The index, which analyzes business climate by company size, reported a drop of 2.9 points among small and medium-sized enterprises (SMEs), reaching -16.1 balance points. Large companies also saw their sentiment fall, though less sharply, with a decrease of 0.5 points.
The data shows that while manufacturing and retail sectors saw slight improvements and construction remained stable, there was a notable downturn in wholesale and services sectors. This mixed performance comes despite improved export expectations following a tariff agreement between the European Union and the United States.
KfW Research attributes these fluctuations largely to continued uncertainty stemming from US policy decisions. The organization notes that “US policies are causing volatility in sentiment,” and that uncertainty about fiscal stimulus measures is dampening hopes for economic recovery.
For large enterprises, this was the first decline in business sentiment recorded this year. Business expectations dropped by 3.0 points; however, assessments of current conditions improved by 1.8 points.
Dr Dirk Schumacher, Chief Economist of KfW Research, commented: “The initial hopes which businesses pinned on the new government appear to be gradually fading.” He added: “Uncertainty remains around the timing and magnitude of the fiscal impetus. The important thing is that measures aimed at boosting growth are implemented promptly.”
KfW continues to support SMEs through various promotional programs on behalf of the Federal Government.