Dutch entrepreneurs less pessimistic in Q3

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.

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.

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.

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.

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