Economy & Politics

The end of the year worries artisans

The craft sector recorded a sharp decline in its activity during the third quarter of 2020. And the outlook for the coming months does not look better.

The craft sector recorded a sharp decline in its activity during the third quarter of 2020. And the outlook for the coming months does not look better.

(ASdN) – If the definitive extent of the crisis is not yet known, the economic repercussions of the pandemic are prolonging. At least that is what emerges from the latest business survey of the Chamber of Trades, based on 1,200 responses. Thus, after the Crafts activity indicator fell by 24 points during the second quarter of 2020, it fell again. Eight points this time, between June and August.

This drop is greater than that anticipated by business leaders in the sector before the summer. The activity indicator is even getting closer and closer to its lowest level reached during the 2008 financial crisis.

The government’s 2021 budget plan provides for 21.7 billion euros in spending. A sum including measures to support economic activity but also to develop the attractiveness of Luxembourg companies.

After confinement, several entrepreneurs had nevertheless observed a resumption of activity. In June, 5% of employers working in the craft industry saw an increase in activity. A rate that even climbs to 18% in September. But this recovery was not uniform. Thus, a third of business leaders (37%) reported a decline in activity.

The craft activity indicator, in which construction occupies a very important weight, can however mask divergent trends at the level of the different groups of trades. If all the craft sectors have been negatively impacted by the health crisis, certain specific activities would have more difficulty in going up the slope such as communication, the fashion branch, health and hygiene and food. The latter sector, which was allowed to continue its activities apart from that of consumer salons forced to close and catering, seems to have the most difficulty recovering from the crisis during the recovery of the third quarter.

Caterers, who bear the brunt of the disappearance of event activities, are indeed in turmoil. “The majority of companies are suffering”, underlines the survey, justifying the situation both by the drop in demand and the rise in costs induced by health measures. “This scissor effect is all the more serious for food, in that these companies feel, for example, the negative effects of teleworking, causing a drop in attendance at salons, stores and points of sale.”

The fashion, hygiene and health sectors are also bearing the brunt of the impact of the health crisis. And the recovery remains slow. The companies indicating a decline in activity always dominate those which can affirm the contrary causing successive decreases of -11 and -10 points for the third and fourth quarter respectively. For the majority of companies in this sector, the loss of turnover recorded during the lockdown is irrecoverable, which creates chronic cash flow problems.

Since the deconfinement last May, the limitation of the maximum number of customers who can be accommodated in the salons for health reasons leads to “a loss of yield and consequent costs”, underlines the Chamber of Trades. In addition, not all customers return: some extend the time between two visits “to save money”, others simply avoid salons, “for fear of becoming infected”.

Handwerk Crafts Lehre Apprenticeship

For the president of the Chamber of Trades, Tom Oberweis, the State must increase its support for SMEs. History that the middle class can get through the coronavirus crisis without too much damage.

The forecasts for the rest of the year are not looking better. They thus highlight the prevailing uncertainty. 81% of business leaders indicate that they believe activity will stagnate (67%) or decline (14%) during this fourth quarter compared to the last period.

This climate of insecurity linked to the crisis situation risks leading to the postponement or cancellation of investments to be made by companies, a decision which should contribute to further disruption of economic recovery.

If the holidays are usually a favorable period, the new restrictions, announced Monday by the Minister of Health, may indeed have a strong impact on the sector. “It is clear that the losses in turnover will be largely irrecoverable, for example because of the cancellation of important events,” said the survey.

However, there is one sector that is showing encouraging signs of recovery: the automotive industry. After a sharp drop in sales during containment, the sector seems to be catching up. According to Statec data, the number of new registrations has certainly fallen by 45% in the second quarter of 2020 compared to the figures for 2019, but increases again in the third quarter of 2020.

In other words, it appears that part of the turnover not realized during the containment could be recovered. As a reminder, in the third quarter, registrations were 11% higher than those of last year.


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