Business confidence virtually unchanged

© Nikki van Toorn (CBS)
At the beginning of Q1 2020, business confidence stood at 6.4, more or less the same level as in the previous quarter (6.6). Expectations for the first quarter are positive in most sectors. Entrepreneurs have a more positive outlook on employment than in the previous quarter. This is reported by Statistics Netherlands (CBS), the Dutch Chamber of Commerce (KvK), the Economic Institute for Construction and Housing (EIB), the Dutch Organisation for Small and Medium-Sized Enterprises (MKB-Nederland) and the Dutch Employers’ Organisation (VNO-NCW) on the basis of the Netherlands Business Survey (COEN).

Business confidence is the sentiment indicator of the Dutch non-financial private sector. In Q4 2019, business confidence was still in sharp decline. At the beginning of 2018, business confidence reached its highest level (18.1) since monitoring started in 2008. Subsequently, the trend has been downward. At the start of 2020, the sentiment indicator was at its lowest level since the second quarter of 2015. Nevertheless, confidence among entrepreneurs is still far above the average level since 2008 (2.2).

Business confidence
JaarKwartaalBusiness confidence
2013Q1-10.7
Q2-11.7
Q3-8.7
Q4-2.7
2014Q11.6
Q24.7
Q32.9
Q44.9
2015Q15.6
Q25.4
Q38.7
Q47.4
2016Q19.3
Q28.8
Q37.9
Q49.2
2017Q114.7
Q215.5
Q315.9
Q413.4
2018Q118.1
Q214.2
Q315.0
Q413.4
2019Q110.6
Q212.0
Q310.6
Q46.6
2020Q16.4
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW
The horizontal line shows the long-term average (2.2).

Retail showing strong decline in confidence

Despite the decline, confidence has been highest in the construction sector among all the sectors, just as in the previous quarter: 13.6. Confidence is also higher than average in wholesale and in the information and communication sector. In Q1 2020, seven out of the twelve sectors are showing a lower level than in Q4 2019.

Of all sectors, retail trade saw the strongest decline in optimism among entrepreneurs at the start of 2020. Confidence has dropped from 12.9 in Q4 2019 to 5.7 in Q1 2020, due to expected lower turnover. The sharpest increase in confidence was seen among entrepreneurs engaging in real estate activities.

Business confidence by sector
BedrijfstakQ1 2020Q4 2019
Construction13.615.3
Wholesale and commission trade12.310.8
Information and communication10.59.5
Business services9.77.4
Real estate, renting and business activities7.42.8
Non-financial private sector6.46.6
Retail trade (excl. cars)5.712.9
Manufacturing2.53.6
Transport and storage1.60
Accommodation and food services0.21.9
Car trade and repairs-7.6-7.2
Mining and quarrying-10.6-8.5
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

For the first time in five quarters, in Q1 2020 more entrepreneurs are expecting staffing increases. Adjusted for seasonal effects, on balance 11.9 percent of entrepreneurs indicate that they will attract more personnel in the coming three months. This percentage stood at 9.4 in the previous quarter.

This positive trend is reflected in the extent to which entrepreneurs indicate they are being hampered in their output and business activities. In each quarter of the past year and a half, 24 to 26 percent of entrepreneurs indicated they were impeded by staffing shortages. This is 21.8 percent in Q1 2020.

Anticipated staff numbers, seasonally adjusted (% balance of enterprises anticipating growth and decline)
JaarKwartaalBalance of enterprises
2016Q13.8
Q24.5
Q35.5
Q47.1
2017Q111.5
Q212.4
Q314.6
Q416.0
2018Q119.2
Q217.0
Q318.0
Q416.6
2019Q115.3
Q214.5
Q311.4
Q49.4
2020Q111.9
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

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