In October, Dutch consumers were slightly less negative about the economy as a whole, but willingness to buy was even slightly lower than in September. This put consumers' willingness to buy at its lowest level since the survey began in 1986. There were also more people again expecting unemployment to rise again in the next 12 months. Something that is not very surprising as it has been slowly rising since April this year, but is still at historically low levels.
Positive news
On a small positive note, Dutch consumers spent more in August than a year earlier (+/+ 4.1%), this also adjusted for inflation. More was spent on services (insurance, hairdressing, restaurants), but less on goods. In particular, home furnishings, clothing, shoes and cars did less. On balance, 8% less was spent on non-food goods. People are clearly postponing expensive purchases, witnessed also by the stagnation of the housing market.
Entrepreneurs less positive
The corporate market paints a different picture. Corporate profits rose to record levels in the first half of the year, this despite the absence of corona support for the first time in 2 years. Companies also continued to invest more in tangible fixed assets, such as buildings, machinery and rolling stock. The mood was already easing in October. Entrepreneurs are also less positive, basing this on their order positions, rising interest rates and falling stock market prices.
Higher stock, lower sales
Companies' initial optimism coupled with the sharply declining propensity to buy among consumers has led to overflowing warehouses with stuff that consumers no longer want, at least not in the quantities the companies expected. This leads to higher inventory levels and, logically, lower sales at the affected companies. For importing companies in particular, which often have to pay for their goods before they arrive at their own warehouses, this results in higher credit needs. In the worst case, existing credit lines are no longer sufficient and it is time to look at overall financing. Perhaps in addition to the existing (debtor) financing, separate inventory financing is the solution. We already wrote about this in this item.
The professionals at Xolv Finance are happy to look at your specific business situation, without any obligation, and advise the best possible financing structure. Even if the economy is not doing well for a while.
