March 14, 2023

The situation varies depending on the sector: while the business climate improved in the manufacturing and building industries, it deteriorated in the business-related services sector and, above all, in trade.

In the manufacturing industry, the rise in the indicator was primarily driven by a more favourable assessment of stock levels, although the more optimistic outlook of business leaders affected all underlying components.

The improved business climate in the building industry was mainly due to greater utilisation of available equipment and more positive demand expectations. On the other hand, business leaders were more reticent about the recent trend in their order books.

By contrast, the indicator fell sharply in the trade sector due to a significant decline in demand expectations, which had clearly strengthened over the previous two months. Expectations of orders from suppliers also dipped, while employment expectations recovered. Trade in motor vehicles and, even more so, textiles have been particularly affected by the gloomy climate this month.

The slackening of confidence in the business-related services sector remains contained. The assessment of current activity levels, considering the season, deteriorated significantly, but expectations in this regard for the next three months, as well of general market demand, improved.

The overall smoothed synthetic curve, which reflects the underlying economic trend, continues to point upwards.

According to businesses, credit conditions remain very strict

The latest quarterly survey on the assessment of corporate credit conditions shows that the general conditions for access to bank credit, which were tightened considerably throughout last year, remain strict at the beginning of 2023. The percentage of businesses that consider credit conditions to be tight stood at 34.3% in January, compared with 35.7% in the previous quarter. This is still, historically speaking, an extremely high level.

The results by sector indicate that, compared to the previous survey, the perception of credit conditions did not change much in the manufacturing industry, while companies active in the building industry and the business-related services sector found them slightly less tight. Bank credit conditions were perceived most negatively in the business-related services sector, with 41.7% of firms stating that they found them tight (45.7% last October), compared with 30.5% in the manufacturing industry (30.2% in October) and 27.2% in the building industry (29.1% in October).

The breakdown by company size reveals that credit conditions were clearly felt to be tighter by large companies (250-499 employees), while there was little change in the perception of other company classes.

Source: National Bank of Belgium
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