Macroeconomic situation causes delays in other sectors, but with smaller impact
Brussels, 26 July 2022 The upturn in trade intensity since the beginning of 2022 continued in Belgium until April. In May, trade intensity suddenly decreased and then stabilised again in June. No sector is an exception to this decline, which is due to various macroeconomic factors such as persistent inflation, the war in Ukraine, the ECB interest rate increase, etc. The strong upward trend at the beginning of the year has turned into a sharp decline since May. For the month of June, the index is stable again, but at a level 7.7% lower than in April, when we were back at 92% of the economic activity before the corona crisis. This is according to the quarterly analysis of the trade intensity index by Altares Dun & Bradstreet. This index collects and processes company and invoice data from the Belgian market every month. The reference point is January 2020 (=100%).
For this latest study, Altares Dun & Bradstreet analysed the payments of some 250,000 companies in Belgium. Read the report.On the basis of the number of invoices sent and other (anonymous) financial data, Altares has established that the economic activity of the hotel and catering industry has suffered more than other sectors. Bars and restaurants lost 20% of their economic activity between April and June. Hotels also suffered between April and May, but saw a slight upturn in June, probably due to the start of the summer season.
Public sector down, with a possible rebound in the autumn
After rising at the beginning of the year, the trade intensity of the public sector followed a trend similar to the average trend in Belgium. It increased nicely up to April, fell in May and stabilised in June. The factor that can change this similar trend is the corona virus. Corona infections in Europe have increased in recent weeks and it is possible that the government will launch new vaccination campaigns in the autumn. This would have an impact on trade, with the public sector seeing a rising curve.
Construction holds up despite inflation
The construction sector also did not escape the general trend of declining trade intensity, but experienced a smaller decline than some other sectors in May. Based on the National Bank survey the construction industry is worried about the future. Unbridled inflation may affect property purchases, which could result in the index falling in the near future. That will depend on the Belgians and their intention to invest in housing, as they have done in recent years. Rising interest rates could play a negative role for the sector.
Joris Peeters, chief data scientist at Altares Dun & Bradstreet: "This decline in trade comes as no surprise to us. The political and economic institutions are concerned about inflation. According to Statbel inflation rose from 8.97% to 9.65% in June. This is the highest level since October 1982, when inflation in Belgium was 9.84%. This high inflation has negative consequences for households, who lose purchasing power, and thus for the economy in general. The authorities are therefore taking measures, such as raising interest rates, to calm economic activity and return to more manageable inflation rates."
