KfW-ifo SME Barometer: Business confidence continues to fall

  • 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.


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:

Digital press kit: http://www.ots.at/pressemappe/DE41193/aom

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