German SME business sentiment declines slightly in November - KfW

The mood among broad parts of the large enterprise sector is nearly identical. In November their expectations dropped by 2.6 points to 9.8 balance points. Both the magnitude of the decline and the level of the expectation indicator were thus very similar to the values in the SME sector.

Details of the report showed that the SMEs outlook for the future in particular is somewhat more subdued than in the previous month. The unexpected election of Donald Trump is weighing on sentiment among German exporters.  Initial reactions within the broader business community, show that companies are only moderately impressed by Trump's victory.

"Despite the somewhat more subdued business climate in November, we maintain our fundamentally positive economic forecast for 2017. It is supported by the consistently good mood in the domestic economy, which has already buoyed growth up to now," said KfW

KfW notes that mood across consumption and residential construction which are the important growth drivers of the German economy continued to be excellent. While sentiment among SMEs in these two sectors remained stable on a high level or rose slightly, it climbed more than six points among large enterprises in both sectors.

"We expect Germany’s economy to grow 1.3% in 2017. The slowdown of half a percentage point on this year’s GDP growth will primarily be due to strong variations in the number of working days. The upswing that started in 2014 will thus continue with only slightly reduced underlying momentum" said KfW.