German SME business confidence surges to highest level in 2-1/2 years

German SME business confidence surged to highest level in two-and-a-half years and convincingly regained the confidence they lost in the previous month.

Their business climate improved 4.2 points to 18.1 balance points in September. That is the strongest increase in a single month since August 2013. Assessments of SMEs’ current business situation rose by 4.6 points, double the usual monthly variation, to 26.1 balance points.

Further, business expectations of small and medium-sized companies improved a vigorous 3.7 points to 9.9 balance points in September, underscoring the recovery that cautiously began in the previous month.

Germany remains on a path of solid economic growth. According to the current prediction, the German economy will grow by an estimated 1.8 percent this year, and even a positive surprise can no longer be ruled out following the very broad and unusually strong improvement to the business climate in September.

Further, considerable political uncertainties are already emerging this autumn, including the presidential elections in the USA and Austria, possible new elections in Spain and the constitutional referendum in Italy. By contrast, employment, consumption and residential construction will probably continue to reliably sustain the German economy.