Business confidence is returning to Germany, despite the recent economic downturn, as energy costs decline, a survey by banks of 1,000 small and medium-sized enterprises showed.
(Bloomberg) — Business confidence is returning to Germany, despite the recent economic downturn, as energy costs decline, a survey by banks of 1,000 small and medium-sized enterprises showed.
Sentiment among the businesses improved in spring after deteriorating in the previous two consecutive surveys, according to the research by DZ Bank and the Federal Association of German Cooperative Banks. The balance of positive and negative assessments increased from 45 to 57 points and exceeded the long-term average.
Business expectations for the coming months have also improved significantly from last fall, when they were at an all-time low, the survey showed. The balance of negative and positive responses has risen in that period from -43 to +7 points.
The analysis cited the decline in electricity and gas prices for the improved mood. The German government introduced energy subsidies, which have contributed to the fall in prices, with the ruling coalition setting up a €200 billion ($218 billion) fund to cushion the costs for households and companies.
Almost three-quarters of companies surveyed continue to describe high energy prices as a problem for their businesses. For almost two-thirds, this also applies to the cost of supplies and raw materials, the bank research showed.
While confidence has improved, the outlook still remains below average by long-term standards, according to the survey.
The banks said that 82% of the companies see their business threatened by a shortage of labor and “in the construction sector, nine out of 10 companies see their business threatened by this issue.”
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