The economic slowdown slows down the record high of medium-sized companies in Germany. After record levels in 2018, the pace of growth will slow down, according to the SME Panel of the state development bank KfW. It is true that employment, turnover and investment will continue to grow. "However, the momentum is declining noticeably - the long-term upswing seems to be starting to run out of steam," said KfW economist Michael Schwartz.
This indicates the end of the medium-sized record years, even if the level is likely to remain high for now. While large export-oriented industrial companies recently lowered their earnings forecasts and announced the reduction of jobs, the approximately 3.8 million SMEs are still largely on course. Last year, there was another employment record. At the end of 2018, 31.7 million people were employed in medium-sized enterprises. That was an increase of 391,000 people over the previous year. The pillars of job growth are services - they are becoming increasingly important.
Despite all the signs of crisis, the medium-sized companies want to create new jobs this year as well. Around 17 percent of respondents to the annual survey said they wanted to increase their workforce. Only about 10 percent want to reduce employment.
Still more jobs
However, job creation is likely to lose pace. "Realistically, around 250,000 new jobs can be expected in SMEs in 2019," the study says.
Thanks to the strong domestic economy, the more domestically oriented SMEs increased their turnover in 2018 on average by 4.9 percent compared to the previous year - the strongest increase in seven years. Despite the economic slowdown, the survey this spring saw significantly more companies expect rising (35 percent) than falling sales (17 percent). However, the mood finally clouded over: "Dark clouds are rising on the horizon," says the study.
Small and medium-sized enterprises increased their investments for the fifth consecutive year in 2018. Overall, the companies put 220 billion euros (plus 4.3 percent) in new plants and buildings and used goods. KfW does not expect an abrupt end to the investments.
KfW ranks small and medium-sized enterprises among companies that do not realize more than EUR 500 million a year. More than 10,000 companies participated in the survey. The KfW SME Panel has been run since 2003 as a written repeat survey of small and medium-sized enterprises in Germany. 10,222 medium-sized companies participated in the current wave. The survey took place in the spring of 2019.