The confidence that entrepreneurs have in their business future is negative again for the first time since the beginning of 2021. It turns out from Tuesday by Statistics Netherlands (CBS) published figures. The institute has not investigated the causes of the decline in confidence, but according to chief economist Peter Hein van Mulligen it is obvious that the sharp rise in inflation is an important factor.
Statistics Netherlands measures on the basis of results from the Business Survey The Netherlands a so-called ‘mood indicator’. Every quarter, about six thousand entrepreneurs from various sectors, except the financial sector, fill in a series of questions. These concern, for example, their expectations about future turnover and profit and to what extent they are faced with staff shortages. The answers to those questions are reduced to a number.
This mood indicator came in at minus 0.9 early this quarter – nine points lower than three months earlier. Business confidence last dropped in early 2020, at the time due to the outbreak of the corona pandemic and subsequent lockdowns. From the second quarter of 2021 through the past quarter, the number fluctuated but remained positive. In the most recent measurement, the profitability of 13 percent of the companies surveyed had declined in the previous three months. On average, pessimism about the economic climate increased.
Worse economic climate
At the start of the fourth quarter of this year, 24 percent of entrepreneurs thought the economy would deteriorate. Those who own their own business in agriculture, forestry or fishing were on average the most pessimistic: 45 percent of them predicted a deterioration in the economy and 3 percent an improvement. The turnaround in the hospitality industry was relatively large from the previous quarter. At the beginning of July, 4 percent of catering entrepreneurs expected the economic climate to get worse, at the beginning of October 38 percent thought so.
“You can see concerns about inflation in the figures,” says CBS chief economist Van Mulligen. According to him, many companies that use a lot of energy, especially SMEs, have problems with the high prices for electricity and gas. “Bakeries, for example, or industry and greenhouses. And if companies themselves are not bothered by the increased prices, they will notice it with the customer. He then buys less.”
The group of entrepreneurs who say they have a staff shortage, on the other hand, has fallen slightly: from 40 percent at the beginning of July to 36 percent at the beginning of October. “The shortage has decreased slightly, but still quite high,” says Van Mulligen. According to him, the companies surveyed expect to be able to hire slightly more staff in the near future if necessary, because the tight labor market has eased.
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