Dutch entrepreneurs less pessimistic in Q3

© Nikki van Toorn
At the start of Q3 2020, entrepreneurial confidence stood at -19.3, up from -37.2 in the previous quarter. The mood in the retail trade sector is predominantly positive, whereas entrepreneurs in food and accommodation services are still very pessimistic. Major differences are also seen among the sectors in terms of their operating results over the first half of this year. More than three-quarters of companies in food and accommodation services reported losses. Furthermore, 43 percent of non-financial enterprises indicated they had put off, halted or even withdrawn investments as a result of the coronavirus crisis.
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). The data for this survey were collected during the month of July 2020.

Business confidence is the sentiment indicator of non-financial enterprises with at least 5 employed persons. During Q2 2020, confidence reached the lowest level recorded since measurements began at the end of 2008 on account of the coronavirus crisis. It recovered to reach the level of -19.3 in Q3, but is still at an all-time low. The quarter-on-quarter increase by 17.9 is the largest ever recorded nonetheless.

Business confidence
YearQuarterBusiness confidence
2008Q4-7
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
2018Q413.4
2019Q110.6
2019Q212
2019Q310.6
2019Q46.6
2020Q16.4
2020Q2-37.2
2020Q3-19.3
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Pessimism remains, but is waning

Relative to Q2, business confidence has improved across all sectors. Aside from retail trade, all sectors still display a negative sentiment. The largest increase in confidence is seen in car trade and repair, by 38 points. This is due to strongly improved sales expectations. In food and accommodation services as well, the sentiment indicator has increased (+32), but entrepreneurs in this sector still have the most negative outlook. On balance, 90 percent of the entrepreneurs in this sector recorded a turnover decline in Q2 relative to Q1.
A positive exception is retail trade, where the confidence indicator stands at +4.5. This is the only sector in which the majority of entrepreneurs are positively inclined. This is largely due to better turnover expectations. On balance, 16.1 percent of all retail entrepreneurs expect their turnover to increase.

Business confidence, by sector
SectorQ3 2020Q2 2020
Non-financial private sector-19.3-37.2
Retail trade (excl. cars)4.5-12.8
Construction-4-10.6
Real estate activities-8.4-20.2
Manufacturing-8.7-28.7
Car trade and repair-9-46.9
Wholesale and commission trade-19-34
Information and communication-20.5-22.1
Transport and storage-21.7-50.1
Mining and quarrying-24.5-42
Business services-25.3-40.3
Accommodation and food services-52.4-84.3
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW


Food and accommodation services as well as culture, sport and recreation in the red

Slightly under half of all entrepreneurs concluded the first half of the year with a profit. 27 percent of businesses had negative operating results; 18 percent had no significant profit nor loss. Over 41 percent of the businesses with 5 to 20 employed persons reported a profit. This share was higher among larger enterprises.
Many entrepreneurs in food and accommodation services and in culture, sport and recreation were pushed into the red by the coronavirus crisis. These entrepreneurs lost a major part of their turnover due to the measures against coronavirus. Only 4 percent of the entrepreneurs in culture, sport and recreation recorded a positive operating result over the first half year, while 78 percent recorded a loss. In food and accommodation services, 7 percent recorded positive figures, while 77 percent incurred losses. These companies can avail of temporary financial relief provided by the government.

The highest profits over the first half year were recorded in the construction sector. Due to the long lead times in this sector, the impact of the COVID-19 crisis may only be felt in a later phase of the business cycle.

Operating results, first half year of 2020
SectorPositive (% of companies)No significant profit or loss (% of companies)Negative (% of companies)Don't know/no opinion (% of companies)
Non-financial private sector47.917.526.58
Construction6225.29.92.9
Real estate activities57.931.64.55.9
Information and communication55.225.313.16.4
Agriculture, forestry and fishing54.121.617.47
Trade52.714.623.88.9
Manufacturing51.716.823.18.3
Specialised business services51.517.9219.6
Rental and other business services40.2192614.8
Transport and storage39.21438.88
Other services34.513.943.28.4
Mining and quarrying30.410.256.62.8
Food and accommodation services9.48.277.25.2
Culture, sport and recreation4.38.477.59.8
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Coronavirus crisis leading to many delayed investments

The coronavirus crisis has had a major impact on at least part of private sector investments. Over 43 percent of entrepreneurs indicate that there have been delays in scheduled or actual investments, while other investments have been stalled or cancelled. Another group of entrepreneurs (11 percent) have carried out investments at a faster pace, started investing earlier, or have made unplanned investments. 46 percent of the entrepreneurs report that the coronavirus crisis has not had any effect on their investments, or had not planned any investments regardless.

Impact of the coronavirus crisis on planned corporate investments
InvestmentsTotal (excl. financial or public utility companies) (% of companies)
Cancelled altogether6.4
Started but suspended3.4
Slowed down or delayed33.6
No impact from corona32
Started ahead of schedule2.5
No investments this year13.7
Unplanned investments due to corona8.4
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

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