BERLIN (Reuters) -Sentiment among small- and medium-sized German businesses nudged into positive territory for the first time since 2022, as slightly more firms showed optimism, a survey found on
Small German Firms Show First Signs of Positive Morale Since 2022
Overview of Small Business Sentiment in Germany
BERLIN (Reuters) -Sentiment among small- and medium-sized German businesses nudged into positive territory for the first time since 2022, as slightly more firms showed optimism, a survey found on Tuesday.
Survey Findings and Index Changes
An index measuring the morale of roughly 1,200 "Mittelstand" companies that form the backbone of the German economy rose to 0.1 points this year from -4.8 points last year, found the survey by credit agency Creditreform.
Challenges Facing Small Firms
A narrow majority of surveyed companies were more optimistic, and the willingness to invest also increased slightly, though both were still below previous levels.
Impact of High Energy Prices
The economy will begin recovering next year, driven by record state spending, but it remains uncertain whether that money can get the economic engine started again, said Patrik-Ludwig Hantzsch, head of Creditreform Economic Research.
Rising Labour Costs
"Relying solely on fiscal measures by the federal government is not enough," he said.
Future Economic Outlook
The majority of companies rated their current situation as negative for the third year in a row as weak industrial production, subdued consumer sentiment, high energy prices and rising labour costs place them under severe pressure.
The proportion of companies with less than 10% equity rose to 30.8%, the highest level since 2017, due to the weak earnings situation in recent years, forcing them to dip into reserves.
"If the equity gap continues to grow, the risk of insolvency will also continue to rise," warned Hantzsch.
(Reporting by Natascha Koch, Writing by Miranda Murray)
