Danish companies expect drop in employment and sales figures

Danish businesses in a majority of sectors expect to see a drop in both employment and turnover numbers during the coming three months.

Danish companies expect drop in employment and sales figures
Danish companies in most sectors expect the coming months to be challenging. Photo by Gabrielle Henderson on Unsplash

Only the service sector has a small majority of companies which expect increased turnover and employment, according to a new review from national agency Statistic Denmark based on surveys conducted with Danish businesses.

In the survey, companies in various business sectors were asked about their expectations for the coming months.

In general, businesses in Denmark have experience challenges in recent months due to a labour shortage as demand increased following the Covid-19 pandemic. A raw material shortage was also an issue in some sectors.

These problems may now have tangible negative impacts on businesses, according to the survey.

“The expectations of businesses for the future in particular paint a clear picture of falling employment and turnover in the coming months,” said Kristian Skiver, senior economist with the Danish Chamber of Commerce.

“Only among service industries is there a small majority of companies that expect increasing turnover,” he said.

Service industries include the hotel and restaurant sector as well as transport, information and communication.

Several issues are dragging optimism levels at Danish businesses, the analyst said.

“Companies are seeing issues with supply chains and production costs are increasing rapidly,” he said.

“Additionally, sale potential has weakened because optimism amongst home consumers has dropped and growth projections for our most important export markets have weakened,” he said.

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Danish central bank says house prices will fall and inflation continue in 2023

Denmark’s central bank Nationalbanken predicts a decline in house prices in 2023 and 2024 in a new economic forecast.

Danish central bank says house prices will fall and inflation continue in 2023

The prediction on house prices is included in the National Bank’s latest review of the Danish economy’s prospects.

According to the central bank, house prices will fall by an average of 5.6 percent in 2023. They will continue to fall in 2024, dropping by 1.8 percent.

The latest prognosis represents a departure from the previous forecast issued by the national bank in March, in which it said it expected house prices to increase by 1.7 percent next year and by 2.1 percent in 2024.

READ ALSO: Should you buy now if you’re looking for a property in Denmark?

The economy is expected to have a tough year in 2023, according to the Nationalbanken forecast.

Inflation will be 4.3 percent, the central bank says, meaning another year of stinging price increases, albeit at a lower level of inflation than the 8.6 percent expected for the whole of 2022.

In 2024, inflation will return to a lower level of 1.7 percent.

Although GDP is predicted to be up by 2 percent at the end of this year, it will drop by 0.1 percent in 2023 before a 1.2 percent increase in 2024.

GDP predictions are also more pessimistic than they were in the March forecast, which expected a 2.1 growth in 2023.

“We can prepare ourselves for a period with weakened [economic] activity and a fall in employment,” the director of the National Bank, Lars Rohde, said in statements accompanying the release of the forecast.

“But it should be kept in mind that this is happening [in Denmark] at a conjuncture following the coronavirus pandemic, which caused a very pressed labour market,” he said.

“It is important to bring down the high inflation. That will require a significant tightening of financial policies and that will unfortunately be felt by everyone – companies and individuals,” he said.

“If we don’t get inflation under control, the costs for society will just get even bigger,” he said to DR.

EXPLAINED: What’s causing the highest inflation rate in Denmark for almost 40 years?

Projected high energy prices this winter are among causes for the expected continuation of inflation next year. Interest rates have also been pushed up.

Unemployment is predicted to increase slightly but will remain at a comparatively low level of 89,000 next year, Nationalbanken said.

Denmark’s unemployment rate is lower than in most other European countries, resulting in a labour shortage.

“The combination of great strain in the labour market, high demand and high inflation create the risk of a self-fulfilling wage-price spiral in Denmark. We therefore believe that fiscal policy must be tightened as soon as possible to significantly bring down demand. This should be by more than what the government proposes in the draft budget,” Rohde told DR.