Mittelstand’s business situation hits a new high

Sentiment among Germany’s Mittelstand remains buoyant. In the Spring issue of our VR Mittelstand Survey the business situation reached a new record high for the third consecutive time: A compelling 92 percent of the SMEs rated their current situation as “good” or “very good”. Compared to the previous autumn, the balance of business expectations also climbed slightly, from 27.3 to 32.5 points. The majority of the members of the Mittelstand, which tends to focus on the domestic market, are thus looking optimistically to the future and are hardly troubled by possible geopolitical or trade-policy risks.

Moreover, the job creation drive by the Mittelstand has reached a new all-time high. More than 30 percent of the companies polled intend to increase their staff in the next half year. By contrast, only 4.1 percent intend to lay off staff. This can also be seen as a response to the lack of skilled personnel, which no less than 78 percent of the Mittelstand find a cause for concern. The good labour market situation is, however, also driving wages up. This already constitutes a problem for almost half of the members of the Mittelstand.

Despite ongoing low interest rates “only” 78 percent of the Mittelstand plan to invest in their companies over the next six months as compared to 82 percent only half a year ago. Indeed, the members of the Mittelstand tend to be ambivalent as to the value of the low interest regime: 41.2 percent of those polled believe rising interest rates would be a bad thing, as their total costs would rise and they would invest less. Yet almost three out of ten of those surveyed hope that interest rates rise, as above all their interest income from investments has fallen. This phenomenon has affected almost half the companies surveyed.

On balance, the positive signals still firmly predominate in our Spring survey. The Mittelstand in Germany is looking forward to another successful year.

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