Business climate in the SME sector improves
After five consecutive declines, the business climate for small and medium-sized enterprises improved again in October. It rose by 2.1 points to minus 17.1 balance points, according to the KfW-Ifo SME Barometer published on Tuesday.
This is due to an improved assessment of the current situation. Expectations also increased. While the business climate deteriorated again in the wholesale and construction sectors, it brightened in the manufacturing, retail and service sectors. While almost all segments reported better expectations, service providers were the only ones to report an improved business situation.
"The SME business climate turned the corner in October. This further strengthens the picture that the economic downturn has finally bottomed out," said KfW Chief Economist Fritzi Köhler-Geib, adding: "Expectations are still the main factor behind the recovery. It is therefore still uncertain whether the minimal contraction in German economic output in the third quarter will be followed by growth in the current fourth quarter."
However, justified economic hopes for the coming year are based on private consumption, which will sooner or later be boosted by rising real wages.
The improvement in the business climate, as seen in the KfW-Ifo SME Barometer, is particularly notable in the manufacturing, retail, and service sectors of the middle class. This upward trend further supports the belief that the economic downturn for small and medium-sized enterprises has reached its lowest point.
Furthermore, the improved business climate in the SME sector could contribute positively to the economic hopes and expectations of the middle class, potentially leading to increased private consumption and real wage growth.
Source: www.ntv.de
