Informations Rapides · 21 January 2021 · n° 017

The business climate in wholesale trade has recovered in January 2021 Bi-monthly survey of wholesaling - January 2021

According to the managers surveyed in January 2021, the business climate in wholesale trade has recovered strongly between November and January. The composite indicator has gained 8 points and stands at 94, below its long-term average (100). The rise in the balance of opinion related to ordering intentions has contributed the most to the business climate’s rise. The balances of opinion related to past activity have participated in it too, indicating that activity has not decreased in the last two months as much as wholesalers could have feared in November owing to the second lockdown.

Graph 1, Climat-gros-g1-en

The balance of opinion on the general business outlook in wholesale trade has rebounded strongly from November to January, but remains below its last September level. Nevertheless, companies are more optimistic regarding their own situation than regarding the sector’s outlook. Indeed, the balances of opinion on ordering intentions and on shipments abroad have recovered in January beyond their September level.

At the sub-sector level, the balance of opinion on ordering intentions for the next two months has bounced back in all sub-sectors, except in the wholesale trade of food products and beverages where it has remained stable. Wholesalers of domestic goods, of information and communication equipment, of other industrial capital goods and of intermediate products have reported their highest ordering intentions since the beginning of the health crisis.

Wholesalers expect the foreign demand to strengthen over the next two months: the balance of opinion related to shipments abroad has risen back above its July level, after having fallen in the autumn. As for the balance regarding ordering intentions from abroad, it has recovered even more than the balance on ordering intentions in total.

From November 2020 to January 2021, the balances of opinion related to the activity of the past two months – sales and received merchandise – have increased again, instead of receding as forecast by the fall in the balances of opinion regarding future activity in November. The cumulated hikes since May have now offset five-sixths of the severe drop recorded between January and May. However trends differ between sub-sectors. The wholesale trades of capital goods or of intermediate products, meant for companies, have been more dynamic these past two months than the wholesale trades of consumption goods (domestic goods, food products).

In that respect, the balance of opinion on past sales has increased very strongly in the wholesale trade of “other industrial capital goods” and in the “other specialised wholesale trade” (fuels, building materials, chemicals, and the like), whereas the balance on ordering intentions had decreased sharply in these sub-sectors in November. In contrast, the balance on past sales in the wholesale of domestic goods has pulled back, probably owing to the second lockdown. Finally, in the wholesale trade of food products, relatively spared during the first lockdown, the balance on past sales has been eroding continuously since September.

The balance of opinion regarding forecasted workforce size has bounced back sharply and has surpassed its long-term average, nevertheless without reaching back its January 2020 level. The balance regarding the recent change in workforce size has somewhat weakened, but much less than during the first lockdown.

In January, the balances of opinion regarding past and expected selling prices have bounced back vigorously and have offset their losses incurred since January 2020. However, both remain below their long-term average.

Fewer wholesalers have considered their cash flow situation to be difficult in January than in November. The related balance has rebounded and has reached its January 2020 level, above its long-term average.

The business climate indicator in wholesale trade of November 2020 has been updated from 87 to 86 as a result of the integration of belated business answers.