Business confidence slightly negative in Q4 2022

The data for this survey were collected in early October.

At the start of Q4 2022, the sentiment indicator stood at -0.9, i.e. 9 points lower than in the previous quarter. Business confidence was down at that time as well, but remained positive for the sixth consecutive quarter. In Q2 2020, the coronavirus crisis caused an unprecedented decline in entrepreneurial confidence. The confidence indicator was positive again as of Q2 2021, but continued to fluctuate.

Sharp turn in sentiment particularly in accommodation and food services

Business confidence declined almost across the board and was negative in five of the eleven sectors. In the previous quarter, the mood among entrepreneurs in each sector was still positive. The strongest decline was seen in accommodation and food services. Entrepreneurs in this sector are mainly negative about the economic climate over the past three months. The decline was also substantial in mining and quarrying, which recorded the most negative business confidence of all sectors. Entrepreneurs in this sector were particularly pessimistic about future output. Only in car trade was the mood more positive than in the previous quarter.

Declining profitability

At the start of Q4 2022, on balance 13 percent of entrepreneurs saw a decline in profitability over the past three months, adjusted for seasonal effects. This was 4 percent in the previous quarter. With the exception of construction, the balance deteriorated across all sectors compared to the third quarter of 2022. Entrepreneurs in mining and quarrying and in information and communication saw their profitability increase on balance, despite the deterioration. Retailers and entrepreneurs in the agricultural sector had the most negative opinions about profitability. The mood in accommodation and food services was also predominantly negative, whereas it was still the most positive of all sectors in the previous quarter.

Pessimism about the economic climate growing further

At the beginning of Q4 2022, on balance 24 percent of entrepreneurs foresaw a deterioration of the economic climate in the next three months. Pessimism about the economic climate prevailed across the board and was higher than in the previous quarter, except in the information and communication sector. In accommodation and food services, on balance 38 percent of entrepreneurs anticipated a deterioration, against 4 percent in the previous quarter. A deterioration was also expected in the culture sector, where entrepreneurs were still predominantly optimistic in Q3. The sector agriculture, forestry and fisheries was the most negative, with 3 percent of entrepreneurs expecting an improvement and 45 percent expecting a deterioration.

More turnover, staffing and investments in 2023

On balance, 14 percent of entrepreneurs anticipate higher turnover in 2023 than in 2022. This optimism for the coming year is lower than it was in the preceding eight years. Expectations for turnover abroad were less optimistic as well compared to previous years; on balance, 10 percent anticipate an improvement. The Business Survey does not contain any questions regarding expectations on the volume of sales (turnover adjusted for price changes). Due to price increases in recent months, the on balance positive turnover expectations are unlikely to translate one-to-one into more positive expectations about volume.

For 2023, 24 percent expect an increase in staffing levels, while 8 percent anticipate a decline. Incidentally, more and more entrepreneurs are being hampered by staff shortages. At the beginning of Q4 2022, more than 36 percent indicated they were predominantly hampered by staff shortages in their business operations. This was still 30 percent one year previously. In terms of investment, more entrepreneurs anticipate an increase than a decrease for 2023; 3 percent, on balance.