OREANDA-NEWS. The economic recovery that KfW has predicted for the year 2013 already since last August is taking on an increasingly clearer shape. This is demonstrated by the January KfW-ifo SME Barometer. It shows that the business climate in the SME sector has improved by 2.1 points to 10.2 balance points. This was the third consecutive increase of the indicator in as many months. The business climate is composed of business expectations for the next six months and the assessments of the current business situation. Some 7,000 enterprises are surveyed every month, 5,600 of which are small and medium-sized.

At the beginning of 2013, business expectations of small and medium-sized enterprises rose very strongly by 4.3 points to 3.2 balance points, rising slightly above the zero line for the first time again since May last year. At the same time, the assessments of the current business situation remain steady on a positive above-average level in a long-term comparison (-0.3 points to 16.9 balance points).

Business sentiment in big enterprises is improving as well. In January they strongly revised upward not only their business expectations (+5.7 points to -0.4 balance points). Unlike the SME sector and for the first time since April 2012, they also rate their current business situation more positively than in the previous month (+2.9 points to 9.0 balance points). The previous survey had revealed a particularly wide gap between the two enterprise size categories. The business climate among big enterprises consequently improved by an even stronger 4.3 points to 4.5 balance points. In big enterprises, the recovery is primarily driven by large-scale industry, which reacts sensitively to global demand variations; their sentiment has improved by more than twice the average monthly variation and, thus, even more significantly than in the small and medium-sized manufacturing enterprises.

The German labour market remains robust even in temporary periods of weakness, thus supporting consumption and the domestic economy. After the latest increase, employment plans (SMEs: +1.1 points to 9.1 balance points; big enterprises: plus 1.6 points to 7.8 balance points) have visibly expanded since the temporary decline of October (5.1 balance points in both size categories).

Dr Jorg Zeuner, Chief Economist of KfW Bankengruppe, commented: "The reversal in sentiment has come, and Germany is gearing up for a rebound. The successful start into the new year gives cause for hope - not only because the recovery will spill over into the manufacturing sector, where output fluctuations strongly shape Germany's business cycle. The fact that big enterprises rate both their situation and their expectations more positively again for the first time indicates a revival of the global economy. Export performance will likely regain momentum again, which along with robust consumption will generate additional impetus and stimulate investment over the year as well. With the unquestionable reversal in sentiment, GDP will probably expand slightly already in the first quarter."