Business confidence in Q2 at lowest level ever measured

© Hollandse Hoogte / David Rozing
Due to the COVID-19 crisis and accompanying measures, entrepreneurs have not been this pessimistic since the start of surveytaking. Business confidence stands at -37.2, down from 6.4 in the previous quarter. This is the sharpest drop ever measured, reaching a level even far below the lowest point during the financial crisis. Confidence is lowest in the sector accommodation and food services. Expectations for the next three months across all sectors are negative, but there are wide differences between the sectors. 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). Data for this survey were collected in April 2020, before a relaxation of the measures was announced on 6 May.

Business confidence is the sentiment indicator of non-financial companies with at least 5 employed persons. At the beginning of 2018, it reached its highest level (18.1). Subsequently, the trend was gradually downward up to and including Q1 2020. Due to the coronavirus crisis, in Q2 the confidence indicator is seeing the largest decline ever since measurements started at the end of 2008. In Q2 2020, the sentiment indicator is at the lowest level ever recorded (-37.2). This level is even lower than the lowest point during the financial crisis in 2009. For the first time since Q4 2013, pessimism prevails among manufacturers.

Business confidence
JaarKwartaalBusiness confidence
2008Q4-7.0
2009Q1-24.3
2009Q2-29.7
2009Q3-23.5
2009Q4-13.5
2010Q1-7.1
2010Q20.5
2010Q33.4
2010Q46.1
2011Q17.2
2011Q210.1
2011Q33.2
2011Q4-4.4
2012Q1-6.3
2012Q2-6.8
2012Q3-8.6
2012Q4-9.2
2013Q1-10.7
2013Q2-11.7
2013Q3-8.7
2013Q4-2.7
2014Q11.6
2014Q24.7
2014Q32.9
2014Q44.9
2015Q15.6
2015Q25.4
2015Q38.7
2015Q47.4
2016Q19.3
2016Q28.8
2016Q37.9
2016Q49.2
2017Q114.7
2017Q215.5
2017Q315.9
2017Q413.4
2018Q118.1
2018Q214.2
2018Q315.0
2018Q413.4
2019Q110.6
2019Q212.0
2019Q310.6
2019Q46.6
2020Q16.4
2020Q2-37.2
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW
The horizontal line shows the long-term average (1.3).

Entrepreneurs have a very pessimistic outlook

For nine economic indicators, entrepreneurs reported their expectations in April relative to three months previously. For each of these indicators, entrepreneurs anticipating a negative development outnumber those anticipating a positive development. In the same quarter last year, the balance for each of these indicators was still positive. Entrepreneurs are mainly negative about the economic climate. Nearly 69 percent of manufacturers are expecting a deterioration of the economic climate in the next three months, while only 3 percent are anticipating an improvement.

Of all indicators, turnover expectations have seen the strongest year-on-year decline. Its balance went down from nearly 28 percent in Q2 2019 to over -54 percent in Q2 2020. In the sector accommodation and food services, turnover expectations are the most negative of all sectors. Here, almost 90 percent of manufacturers expect turnover to be lower in the current quarter than over the previous three months.

Expectations among entrepreneurs for the next three months
IndicatorQ2 2020 (% balance of positive and negative answers)Q2 2019 (% balance of positive and negative answers)
Output prices / rates-6.812.7
Staff numbers-23.418.3
Foreign turnover-35.010.3
Foreign order position-35.96.7
Purchase orders-48.814.0
Output-51.426.0
Turnover-54.327.6
Order position-58.016.7
Economic climate-65.55.9
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Furthermore, entrepreneurs gave their outlook on investments for 2020. More than 44 percent of entrepreneurs expect investments in fixed assets to decline in 2020 year-on-year; 7.4 percent anticipate growth.

Confidence down in accommodation and food services

In Q2 2020, business confidence declined across all sectors. Due to the many company closures as part of the COVID-19 measures, entrepreneurs in accommodation and food services have the most pessimistic outlook. The sentiment indicator stands at -84.3 in this sector. In the previous quarter, entrepreneurs were still more or less neutral.

In nine out of the twelve sectors, the confidence indicator is at its lowest level ever measured. In addition, the confidence deterioration in each of the sectors - except for information and communication - has never been so substantial within one quarter. Just as in the previous quarter, manufacturers in construction are the most confident. Nevertheless, the sentiment indicator stands at -10.6 in this sector, the lowest level since the beginning of 2014.

Business confidence among sectors
BedrijfstakQ2 2020Q1 2020
Construction-10.613.6
Retail (excl. cars)-12.85.7
Real estate activities-20.27.4
Information and communication-22.110.5
Manufacturing-28.72.5
Wholesale and commission trade-34.012.3
Non-financial private sector-37.26.4
Business services-40.39.7
Mining and quarrying-42.0-10.6
Car trade and repair-46.9-7.6
Transport and storage-50.11.6
Accommodation and food services-84.30.2
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

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