BERLIN, Aug. 7 (Xinhua) -- Business confidence among Germany's small- and medium-sized enterprises (SMEs) took a nose-dive for the third consecutive month in July.
The confidence index dropped by 4.2 points compared to the previous month, reaching -17.7 balance points. Negative values in this indicator reflect a below-average economic performance, according to Germany's KfW Research on Tuesday.
The situation assessment component of the business climate index fell by 4.2 points to -15.9 balance points. Therefore, the indicator is almost as low as it was at the start of the year. Six-month business expectations also plunged, falling 4.0 points to -19.7 balance points.
The results of KfW's research were broken down by company size and economic sector.
In July, the decline in confidence was observed across SMEs in all sectors, with the services sector being the most affected, followed by retail. However, despite the downturn, the services sector maintains a relatively positive outlook compared to other sectors.
Confidence among large enterprises also deteriorated in July. The index for large enterprises dropped by 2.1 points to -22.0 balance points, a slightly less pronounced decline compared to the SMEs sector. However, sentiment among large enterprises has been significantly lower than that of SMEs in recent months.
"Confidence among German businesses has decreased for the third straight month. This downturn goes beyond mere expectations, as the actual business conditions for surveyed companies have also worsened," said Fritzi Koehler-Geib, chief economist of KfW.
"Following the trend reversal in business surveys and the slight GDP decline in the second quarter, the outlook for the anticipated economic recovery is now uncertain. However, there is a silver lining, as consumer sentiment continues to show signs of improvement," added Koehler-Geib.
