Business Confidence of the Netherlands Private Sector Declined in Q4 2019
Sat, April 10, 2021

Business Confidence of the Netherlands Private Sector Declined in Q4 2019

The business confidence of the Netherlands private sector declined from 10.6 in the third quarter to 6.6 in the fourth quarter this year, reports Dutch governmental institution Statistics Netherlands / Photo by: Skitterphoto via Pixabay

 

The business confidence of the Netherlands private sector declined from 10.6 in the third quarter to 6.6 in the fourth quarter this year, reports Dutch governmental institution Statistics Netherlands. 

Business Confidence

Business confidence shows the forward-looking expectations of firms. Usually measured by the survey, companies are asked about their expectations for the next six to 12 months. The Business Confidence Index (BCI) is an indicator of future developments in the country. It likewise shows the optimism that business managers have on the economic conditions of a region or country, explained professional FOREX trader and real estate investor Reddy Shyam Shankar.

In the fourth quarter of 2019, the Netherlands’ business confidence declined. The greatest deterioration was seen in the information and communication sector and the mining and quarrying sector. The index in the information and communications industry also fell from 25.0 in Q3 to 9.5 in Q4. Statistics Netherlands added though that business confidence in this particular industry indicates an irregular pattern. The mining and quarrying sector’s business confidence level was at 8.9 in Q3 and declined to -8.5 in Q4. 

The transport and storage sector also went down to 10.3. The construction sector’s business confidence experienced a sharp decline as well from 20.6 in Q3 now at 15.3.  This more than 5 points of decline was related to the management of nitrogen pollution and PFAS contamination. Yet, compared to other sectors, the business confidence in the construction industry remains high despite the decline. The report refers to PFAS, a chemical compound of perfluoroalkyl substances that have properties that enable them to repel both oil and water. 

They are used commercially in various consumer products, such as cleaning products, waxes, polishes, paints, non-stick pans, carpets, and clothing. PFAS in the excavated soil became an issue in the Netherlands after the release of fire foams and emissions into the air that contains PFAS.

Accommodation and food services also declined from 7.4 to 1.9.  Other sectors included in the list are business services from 15.3 to 7.4, manufacturing from 3.9 to 3.4, and wholesale and commission trade from 12.9 to 10.8.

Sectors with an increased business confidence level

The report also highlights other sectors that experienced an increased level of business confidence. It includes the automotive sector, although still negative. The retail trade likewise increased from 7.6 in the Q3 to 12.9 in Q4. Another sector that increased business confidence is real estate, including renting and business activities from 1.5 in Q3 to 2.8 in Q4.

In the fourth quarter of 2019, the Netherlands’ business confidence declined. The greatest deterioration was seen in the information and communication sector and the mining and quarrying sector / Photo by: DennisM2 via Flickr

 

Entrepreneurs’ Expectations for 2020

Entrepreneurs in the Netherlands have different outlooks for 2020 but overall they have positive expectations. The report reads that 18.9% of the entrepreneurs are expecting a turnover growth next year, especially in the mining and quarrying and the construction sectors. The record shows that 13.0% of the entrepreneurs in the country expect higher staff numbers next year than in 2019. Furthermore, 5.0% expect a higher investment level, 9.3% expect a decline in investments, and 25.6% of the entrepreneurs in the real estate industry expect that investments will increase.

The Brexit, withdrawal of the UK from the European Union, may have also taken a toll on the willingness of the companies to expand the capacity of their production, as viewed by global economists and strategists from ING.

Business Confidence Index From OECD

Organization for Economic Co-operation and Development, an intergovernmental economic organization with 36 member countries founded to stimulate economic progress and world trade, shares the BCI of the Netherlands. In January 2010, its amplitude-adjusted BCI was at 99.4, which increased to 100.8 in January 2011 and 100.0 in January 2012. Other data are as follows:

January 2013: 99.4

2014:100.2

2015: 100.5

2016:100.6

2017: 101.0

2018: 101.3

2019: 100.4

Female Entrepreneurship

The Netherlands is a country that scores high on various gender equality indicators, including financial and digital inclusion of women and their legal protection. Yet, a recent report from management consulting company McKinsey & Company shows that the potential of women in the labor market remains “significantly untapped.” The report says that there are only a few female entrepreneurs in the country. Although women make up 52% of Europe’s total population, only 30% of them are entrepreneurs. Females' share of participation in the Dutch workforce is currently at 46% but their contribution to the gross domestic product is “considerably lower.” Women’s contribution to GDP is only 33% in the Netherlands compared to 38% for women in Western Europe.

McKinsey believes that it is due to the lower number of hours worked by the Dutch women. On average, they only work 27 hours per week while men work 37 hours. The report pointed out that giving Dutch women a stronger position in the labor market can help bring opportunities not only for individuals but also for the business sectors and the economy.

The recent business sentiment indicator only shows that businesses have become less optimistic. Yet, the Netherlands is holding up well based on its 0.4% 3Q19 GDP growth rate, which measures how fast its economy is growing.

The Netherlands is a country that scores high on various gender equality indicators, including financial and digital inclusion of women and their legal protection / Photo by: wavebreakmedia via Shutterstock