The mood among German small and medium-sized enterprises (SMEs) worsened again in November. The KfW-ifo SME Barometer recorded its sixth consecutive decline, with the business climate index dropping by 0.9 points to -20.5. This figure is well below the long-term average, represented by the zero line. The main driver behind this negative trend is the significantly lower assessment of the current business situation by SMEs, which fell by 2.2 points to -21.8.
Slight Optimism in Business Expectations
While assessments of the current situation remain negative, there is a minor improvement in six-month business expectations. These rose slightly by 0.4 points to -19.4. However, the overall level remains low, reflecting ongoing uncertainties among SMEs.
Retail Sector Shines Amid Gloomy Environment
Despite the generally negative sentiment, the SME retail sector shows a positive trend. Since August, the business climate in this sector has steadily improved. Particularly noteworthy is the better assessment of the current situation, which raises hopes for stable or even increasing sales in the fourth quarter. The SME manufacturing sector also shows slight signs of recovery, as it is less affected by international protectionist measures.
Large Companies Face Greater Challenges
While SMEs manage to stabilize in certain areas, the situation for large industrial companies is considerably worse. Their business climate index fell by 2.6 points in November to -22.9. Future outlooks, in particular, have significantly deteriorated, reflecting global economic uncertainties and heavy reliance on international markets.
Bleak Outlook for Employment
Employment expectations are also worsening. Many companies, especially in manufacturing, wholesale, and large retail sectors, plan to reduce their workforce. Even SMEs, which have so far acted as a stabilizing force, are beginning to show signs of restraint. KfW Research economist Dr. Philipp Scheuermeyer cautions: “It is unclear how long companies can maintain their workforce in the face of underutilized production capacities.”
Conclusion: Light and Shadow in the SME Sector
The KfW-ifo SME Barometer highlights the continued challenges facing SMEs. Only the retail sector currently provides positive signals. However, with persistently weak employment expectations and pessimistic business outlooks, the overall situation remains strained. The coming months will be crucial in determining how long stability in the labor market can be maintained.