Business confidence among small and medium-sized enterprises (SMEs) in Denmark has hit its highest level in two years, new data from SMV Danmark has revealed.
According to the group’s latest business climate barometer, the confidence indicator reached 99.9 in August, putting it slightly below (0.1 points) below the historical average.
SMV Danmark’s business confidence indicator combines assessments from the manufacturing, construction, retail and service sectors to provide an overall picture of companies’ views of economic conditions.
‘Turning around’
“It is positive that the mood among SMEs is now turning around,” commented Sofie Katrine Nygaard Pedersen, consultant at SMV Danmark. “But we should not get ahead of ourselves. Business confidence has been under pressure for a long time, and now we have to see whether the positive development will last in the coming months.”
While confidence among SMEs has remained subdued for some time, and below the level of large companies, the gap has narrowed in recent months – in August, the gap between the two groups stood at 0.6 points, with large companies recording a confidence level of 100.5.
Retail SMEs have recorded a notable increase over the past two years, SMV Danmark noted, with business confidence rising from 98.7 to 111.0 over the period.
“The business confidence of SMEs is now almost on par with that of large companies,” Pedersen added. “This is a significant change after a longer period in which small and medium-sized companies have been more cautious in their assessment of the economic situation.”
Return to 2022
The latest figures mark a return towards levels recorded last experienced in spring 2022, prior to Russia’s invasion of Ukraine. Apart from a reading of 100.4 in July 2024, the August figure is the highest since May 2022, when SME business confidence stood at 102.3. It subsequently fell to 98.6 in June 2022.
In the intervening period, firms have experienced an energy crisis, higher inflation and rising interest rates. Inflation has since fallen, while interest rates are lower than two years ago and household purchasing power has improved, the group noted.
“This gives more breathing space for both companies and consumers and may help explain why business confidence is at its highest level in two years and is approaching the level from the beginning of 2022,” said Pedersen. Read more here.
