May 22, 2024

Business confidence slightly less negative once again

There has been another slight improvement in business confidence, which stood at -6.0 at the start of Q2 2024. Sentiment improved in the car trade and repair sector and the transportation and storage sector, in particular. A shortage of staff remains the main obstacle for business owners, who are seeking to improve employment conditions and introduce automation in response. This is reported by Statistics Netherlands (CBS), the Dutch Chamber of Commerce (KvK), the 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 April.Business confidence declined sharply between the end of 2021 and the end of 2022, reaching a low of -22.2. There has been a tentative recovery since then. At the start of Q2 2024, the sentiment indicator rose slightly for the second consecutive quarter. Business confidence remains below the average (-4.1) for the series since 2012, however.

 

Business confidence
Jaar Maand Business confidence
2019 Jan 4.0
2019 Apr 2.4
2019 Jul 0.9
2019 Oct -4.6
2020 Jan -1.6
2020 Apr -51.9
2020 Jul -22.8
2020 Oct -15.9
2021 Jan -11.4
2021 Apr 0.0
2021 Jul 11.9
2021 Oct 12.9
2022 Jan -0.6
2022 Apr -9.9
2022 Jul -12.5
2022 Oct -22.2
2023 Jan -13.2
2023 Apr -8.1
2023 Jul -8.3
2023 Oct -10.1
2024 Jan -7.7
2024 Apr -6.0
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

Sentiment remains negative in most sectors

Business confidence in most sectors has improved this quarter, but is still negative overall. Confidence has improved fairly strongly in the car trade and repair sector and in the transportation and storage sector. It rose the most in the mining and quarrying sector, after falling the most in the previous quarter; however, this industry is relatively small and thus has a limited effect on the overall figure. Sentiment is the most positive in the culture, sports and recreation sector. It is the most negative in the construction sector and in agriculture, forestry and fisheries.

 

Business confidence by sector
  April 2024 January 2024
Total (excl. financial and utilities companies) -6.0 -7.7
Culture, sport and recreation 2.8 -2.4
Mining and quarrying 1.7 -28.9
Business services -1.0 1.6
Information and communication -1.2 2.3
Transportation and storage -2.6 -13.7
Other services -2.8 -1.5
Car trade and repair -3.7 -21.5
Real estate activities -4.0 -8.1
Accommodation and food services -4.6 -13.5
Manufacturing -8.3 -7.1
Retail trade (excl. cars) -8.7 -5.4
Construction -10.2 -15.9
Wholesale and commission trade -10.2 -8.3
Agriculture, forestry and fisheries -15.1 -16.9
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

 

Labour shortage still the main issue

The labour shortage is still the most frequently cited obstacle for businesses, and was identified by over 36 percent of respondents. For the first time in nearly two years, this share rose slightly compared to the previous quarter. Nevertheless, it is still below the mid-2022 peak, when nearly 48 percent of business owners reported the shortage of labour as an issue. Since then, business owners have increasingly been citing weak demand as an obstacle (nearly 21 percent). The issue of weak demand was mentioned the most frequently in manufacturing, at 27 percent. Entrepreneurs in business services cited staff shortages as an obstacle the most often, at nearly 53 percent. This issue is also affecting nearly half of business owners in the car trade and repair sector and the retail sector.

Main obstacles for business owners
Jaar Maand Labour shortage (% of businesses) Weak demand (% of businesses) Shortage of means of production, materials, space (% of businesses)
2019 Jan 27.0 9.1 5.5
2019 Apr 27.2 9.3 5.2
2019 Jul 28.3 11.0 4.2
2019 Oct 28.0 11.6 4.0
2020 Jan 25.3 13.9 3.9
2020 Apr 11.0 22.9 5.4
2020 Jul 11.2 28.6 5.1
2020 Oct 13.0 26.2 4.5
2021 Jan 11.9 22.6 4.8
2021 Apr 15.2 19.5 9.0
2021 Jul 27.9 14.7 15.4
2021 Oct 37.3 11.9 16.9
2022 Jan 34.2 11.5 16.8
2022 Apr 42.3 10.3 23.8
2022 Jul 47.7 11.2 21.8
2022 Oct 46.6 13.7 20.6
2023 Jan 42.5 14.5 15.6
2023 Apr 40.8 16.0 13.3
2023 Jul 40.6 16.4 11.7
2023 Oct 39.7 19.7 9.0
2024 Jan 35.3 20.4 7.0
2024 Apr 36.5 20.8 7.5
Source: CBS, EIB, KVK, MKB-Nederland, VNO-NCW

 

Improvements in working conditions main response to staff shortage

Nearly 70 percent of business owners report staff shortages. Businesses are responding to this in various ways. Nearly 34 percent say they are improving working conditions (such as giving staff a salary increase). This is the most frequently mentioned approach across almost all sectors. About a quarter of business owners are introducing more automation in response to staff shortages; in manufacturing, almost a third are taking this approach. Just over 12 percent say they are bringing in more labour from abroad. Enterprises in the agriculture, forestry and fisheries sector indicate this the most often, in relative terms. Nearly 17 percent are limiting the goods and services supplied according to the number of staff available. Business owners in the car trade and repair sector and the accommodation and food services sector are particularly likely to mention this solution.

Source: Statistics Netherlands
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