Mood in German SMEs deteriorated in July
The mood among German SMEs has deteriorated for the third consecutive month in July. The business climate index fell by 4.2 points to -17.7 compared to the previous month, according to a survey by state development bank KfW on Tuesday. Negative indicator values indicate below-average economic conditions.
"This is more than just a sentiment downturn driven by expectations, as the business situation of the surveyed companies has also deteriorated again," commented KfW's chief economist Fritzi Köhler-Geib on the development. After the turnaround in business surveys and the slight decline in GDP in the second quarter, there are now larger question marks behind the previously expected economic recovery. However, there are also signs of hope. "Above all, the recovery in consumer sentiment has continued until now," said the chief economist.
The downturn in sentiment affects small and medium-sized enterprises across all sectors, with the service sector being the most affected, followed by retail. "However, companies in the service sector still rate their situation significantly better than companies in other sectors," it was noted.
The index for assessing the business situation fell by 4.2 points to -15.9 in July, almost as low as at the beginning of the year. The outlook for the next six months also darkened significantly: this indicator fell by 4.0 points to -19.7.
The service sector, being the most affected, experiences a downturn alongside other sectors, as indicated by the survey. Despite this, companies in the service sector generally perceive their situation better than those in other sectors.
