KfW-ifo SME Barometer: Business confidence continues to fall

Frankfurt/Main (ots) -

- SMEs' situation assessments and expectations were down in April
- Concern over a global trade war weighs on sentiment
- Upswing is slowing down but remains robust

Business sentiment continued to fall across Germany in April,
according to the current KfW-ifo SME Barometer. Confidence among SMEs
fell by 1.5 points to 15.0 balance points, the third consecutive
drop. Situation assessments were lower (-1.1 points to 27.2 balance
points), as were expectations (-1.9 points to 3.6 balance points).
Confidence among large enterprises also dipped again. Their business
climate fell by -0.9 points to 13.1 balance points.

As recently as half a year ago, Germany's enterprises expected the
global business cycle and global trade to pick up noticeably. They
now fear a global trade war, however, given the threat of US punitive
tariffs and tension between the US and China over trade policy. This
is consistent with the fact that both large firms and SMEs of the two
sectors most deeply integrated into global trade - manufacturing and
wholesale - have recorded the strongest downturn in sentiment since
last winter. At the same time, manufacturers' export expectations
have dropped sharply from their multi-year highs in autumn, although
they stabilised slightly in April (SMEs: unchanged at 3.0 balance
points; large enterprises: +2.0 points to 6.9 balance points).
Confidence in the services sector dropped further but remains on a
high level (SMEs: -3.3 points to 12.6 balance points, large
enterprises: -0.9 points to 17.7 balance points). The important
segment of business services in particular is unlikely to remain
unaffected by the downward trend in manufacturing.

But construction and retail, the two sectors primarily focused on
the domestic economy, sent out positive signals in April. In these
two sectors, business confidence was up - both in SMEs and in large
enterprises.

"The April findings of the KfW-ifo SME Barometer are cause for
neither excessive pessimism nor uncritical optimism," said Dr Jörg
Zeuner, Chief Economist of KfW Group. "But confidence has passed its
peak, and after the latest disappointing industrial output, retail
turnover and export figures, the first quarter in particular will
likely remain below the previously high expectations. I expect the
upturn to slow down but continue. Growth in 2018 is likely to be very
decent and clearly above the potential rate. The reliable, robust
domestic demand and, not least, the good to very good sentiment in
the business community even after the recent drops are indications of
this. A continuation of the upturn will crucially depend on whether
the threat of protectionism can be effectively contained together
with European and international partners before fears of new trade
barriers begin to weigh more strongly on businesses' willingness to
invest", said Zeuner.

Note:

KfW Research has fundamentally revised the KfW-ifo SME Barometer
in collaboration with the Ifo Institute. Changes enter into with
effect from April 2018. The most important new feature is the
inclusion of the services sector and export expectations of SMEs and
large enterprises of the manufacturing sector. This is the first
design reform to the barometer since it was first published in
December 2004. Because the services sector was first surveyed at a
later date, it is no longer possible to fully reference all
indicators to the year 1991. The revised time series therefore
uniformly begin with the reporting month of January 2005. As before,
they are presented as seasonally and mean-adjusted balance figures.

The current KfW-ifo SME Barometer can be downloaded from:
http://ots.de/sLwoSy

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Christine Volk,
Phone: +49 (0)69 7431 3867, Fax: +49 (0)69 7431 3266,
E-Mail: Christine.Volk@kfw.de, Internet: www.kfw.de

Original-Content von: KfW, übermittelt durch news aktuell