Business confidence negative in Q3, as in the preceding quarters

© CBS / Alrik Swagerman
At the start of Q3 2023, entrepreneurial confidence stood at -8.3. It was at virtually the same position three months previously. The sentiment indicator was balanced in terms of increase and decline, but remained negative across almost all sectors. Furthermore, expectations about both purchase orders and investments have declined year on year. 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 in July.

As of July 2023, CBS implements a new method to calculate business confidence, which involves recalculation of the time series. More information can be found in a background article. Entrepreneurial confidence declined from the end of 2021 until end of 2022. This was followed by tentative recovery in 2023, but the indicator still remained negative.

Business confidence
JaarMonthBusiness confidence
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Negative mood in most sectors

In almost all sectors, entrepreneurial sentiment was negative at the start of Q3. Only in the sectors information and communication, and in culture, sports and recreation, are entrepreneurs slightly positive. The mood improved for the third quarter in a row in these sectors and in retail trade. Confidence in the construction sector and in real estate activities increased most substantially, although it was still the lowest among all sectors. A separate indicator for the construction sector is compiled by EIB which follows the old method; this sentiment indicator declined, but did remain positive. Confidence fell most sharply among entrepreneurs in car maintenance and repair services and in wholesale and commission trade.

Business confidence by sector
SectorQ3 2023Q2 2023
Total (excl. financial and public sector)-8.3-8.1
Information and communication21.3
Culture, sports and recreation0.50.2
Transportation and storage-2.1-6.1
Business services-3.9-0.5
Retail trade (excl. cars)-6-8.1
Wholesale and commission trade-7.4-0.7
Mining and quarrying-7.8-11
Car trade and repair-10-0.9
Other services-10.4-4.4
Accommodation and food services-10.8-7.7
Agriculture, forestry and fisheries-13.1-12.7
Real estate activities-13.3-20.7
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

More negative opinions about order position

On balance, entrepreneurs were negative about their expected order position, with the indicator showing a further decline on last year. At the beginning of Q3 2023, on balance 2 percent of entrepreneurs expected a decline in the value of their order positions over the next three months. One year earlier, on balance nearly 5 percent were still expecting an improvement. It is the first time that the expected order position is negative since the beginning of 2021.

In most sectors, entrepreneurs are more negative or less positive about their expected order position than last year. The strongest declines are seen in culture, sports and recreation, in manufacturing and in car trade and repair. In the latter sector, entrepreneurs are the most negative, with on balance nearly 15 percent expecting their order position to deteriorate. Entrepreneurs in accommodation and food services are also less positive than last year, although still the most positive among all sectors; on balance, nearly 9 percent expect to see more purchase orders.

Expectations about order position by sector
SectorQ3 2023Q3 2022
Total (excl. financial and public sector)-1.94.7
Accommodation and food services8.919.4
Real estate activities5.96.2
Culture, sports and recreation0.913
Wholesale and commission trade-1.76.7
Information and communication-2.8-0.9
Business services-2.81.6
Transportation and storage-32.3
Other services-3.3-7
Retail trade (excl. cars)-3.44.9
Agriculture, forestry and fisheries-5.9-7.9
Car trade and repair-14.7-3.2
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Investment outlook for 2023 less positive

At the start of Q3 2023, nearly 17 percent of the entrepreneurs expected to make more investments in the current year relative to 2022. Nearly 16 percent were expecting to invest less, while the remaining 67 percent expected investment to remain stable. Therefore, on balance, nearly 1 percent anticipate an increase in investments. One year previously, this was still slightly over 7 percent of entrepreneurs on balance. The investment outlook has not been this low since the beginning of 2021.

In most sectors, entrepreneurs still foresee an increase in investments on balance. Expectations vary widely per sector, but deterioration is visible in almost every sector. The investment outlook has declined most strongly in accommodation and food services; on balance, nearly 8 percent expect lower investments. One year previously, that sector expected to see an increase by over 16 percent. Entrepreneurs in agriculture, forestry and fisheries as well as construction are most negative about investments for the current year. The most positive sector is culture, sports and recreation.

Expected investment growth by sector
SectorQ3 2023Q3 2022
Total (excl. financial and public sector)0.97.3
Culture, sports and recreation21.19.9
Mining and quarrying14.834.5
Transportation and storage13.115.4
Car trade and repair11.78
Real estate activities11.319.9
Information and communication4.26
Wholesale and commission trade3.99.3
Business services1.75.3
Retail trade (excl. cars)-2.41.2
Other services-3.7-0.3
Accommodation and food services-7.916.5
Agriculture, forestry and fisheries-10-5.2
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW