2024-09-29 12:11:27
Loss of orders, falling sales, low willingness to hire: the mood among German medium-sized businesses is poor. These are the reasons.
According to a study, the mood among German medium-sized businesses has continued to deteriorate and remains tense. Low investment activity and weak consumer spending put a heavy burden on the business of medium-sized companies, as the credit agency Creditreform reported. The middle class is showing “almost depressive traits,” said the head of Creditreform economic research, Patrik-Ludwig Hantzsch. The mood is “as bad as it was at the height of Corona, when no one knew how bad the pandemic would get.”
The study is based on a representative survey by Creditreform among 1,200 small and medium-sized companies. The result: Business has been disappointing recently, and there are no signs of any positive economic impulses. A third of those surveyed had to accept a loss of orders, only 18 percent recorded an increase in incoming orders. Only just under a quarter of companies achieved an increase in sales in the past few months. It has been 20 years since the business climate in medium-sized companies was negative for two years in a row, said Hantzsch. “The good mood at the beginning of the year that economic experts and the federal government spread was unfortunately premature.”
It was said that the situation had deteriorated significantly, especially in the manufacturing and retail sectors. According to the investigation, there was a slump particularly in the construction sector. Small and medium-sized businesses that supply industry are coming under increasing pressure in the current economic downturn, and the increasing number of bankruptcies are just the beginning, says Hantzsch.
According to the survey, almost 80 percent of medium-sized companies are dissatisfied with the federal government’s economic policy. From a company perspective, the most pressing issues are reducing bureaucracy and the shortage of skilled workers. According to the study, uncertain economic prospects and a lack of liquidity are inhibiting the willingness to invest. Only 40 percent of companies are planning investments. Although this is more than in the previous year, according to Creditreform it is less than the average of previous years.
The negative economic development also had an impact on the labor market. A good 21 percent of companies, even more than in 2023, cut staff. According to the information, the main reason for this is the weak order situation and the shortage of skilled workers. The willingness to hire among medium-sized companies has therefore fallen to its lowest level in the past ten years.
With inflation falling, fewer companies have increased their prices. Only around 30 percent increased their sales prices, compared to 40 percent who said this in the previous year. A good 10 percent have reduced prices.