September 6, 2023

Slight easing of credit conditions and stabilisation of business confidence in August

Business confidence remains stable in August in Belgium

-The fall in the indicator, begun in April, levelled off. This stabilisation compared to the previous month masks, however, disparate developments at sector level.
-The business climate improved somewhat in trade but deteriorated in the building industry.

There was little change in the manufacturing industry and business-related services. Traders expect demand to rise and thus to increase their orders with suppliers. Only employment expectations were more muted, although this did not prevent the synthetic indicator from rising after two months of decline. In the building industry, confidence is suffering from much gloomier demand expectations and a less favourable assessment of order books. The recent trend in the latter was assessed more positively, while that for the utilisation of equipment was revised downwards.

The confidence indicator stabilised in the manufacturing industry, influenced by a fall in all underlying components, with the exception of demand expectations, which displayed strong growth.
Finally, after two months of sharp decline, general market demand expectations recovered as well in the business-related services sector, which also benefited substantially from an improved assessment of current activity. On the other hand, business leaders expressed a much more reserved opinion when it came to expectations of their own activity. All in all, confidence in this sector remained fairly stable.

Influenced by the negative results of recent months, the smoothed synthetic curve, which reflects the underlying economic trend, continues the downward movement begun in July

Businesses report easing of credit conditions in July

According to the July 2023 survey of businesses on their perception of credit conditions, general conditions to access bank credit eased somewhat compared with the previous quarter: 37.3% of firms surveyed considered credit conditions to be tight, compared with 39% the previous quarter. Despite this slight dip, the percentage remains extremely high by historical standards.

For the third straight quarter, the perception of access to bank credit improved in the business-related services sector: 37.6% of companies active in this sector perceived access to bank credit as tight in July (compared with 41.1% in April). This percentage is now close to that observed in the other two sectors surveyed. More precisely, it stands at 37.4% in the manufacturing industry, which reported very limited easing (down from 38.8% in April), and at 35.5% in the building industry, the only sector in which credit conditions were perceived as less favourable (30.6% in April).
The results by firm size show that businesses of all sizes perceived an improvement, with the exception of very large companies (those with 500 or more employees), which felt more constrained than in the previous quarter. In absolute terms, small (fewer than 50 employees) and medium-sized (between 50 and 249 employees) businesses continue to report the most difficulty in accessing credit.

Source: National Bank of Belgium
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