Manufacturers and business services remain optimistic

Producers’ confidence in the manufacturing industry is 6.1 in April 2006. This means manufacturers are about just as optimistic as in March. They are more positive about their order books than in March, but slightly less satisfied about future production and stocks of finished product. Manufacturers do not expect employment to decrease. Capacity utilisation rates rose slightly in the manufacturing industry.

Companies in the business services sector are becoming increasingly positive about future turnover and orders. Nearly half of them also plan to recruit more staff, according to figures from Statistics Netherlands.

Manufacturing companies again more positive about orders

Producers’ confidence is a sentiment indicator for the manufacturing industry. The figure is compiled from three component indicators: expected production in the next three months, opinions on stocks of finished product, and opinion on the order books.

Producers’ confidence in the manufacturing industry is 0.2 of a point higher than in March. This is the fourth month in a row that it has increased. The confidence of manufacturing companies is higher than it has been since November 2000.

Manufacturing industry expects employment to stabilise

Thirteen percent of manufacturing companies want to reduce their staff in the coming three months, while 12 percent expect to increase staff numbers.  This means that in the opinion of manufacturers the decrease of employment in the manufacturing industry has come to a halt. The percentage of manufacturers who want to recruit more workers has not been this high since May 2001.

For the coming three months 16 percent of manufacturers expect to raise the prices of their products, while 8 percent expect to reduce prices. On balance, producers of semi-manufactures ad investment goods expect higher prices. In the consumer goods industry, on the other hand, more manufacturers expect lower than higher prices.

Capacity utilisation up slightly in manufacturing

The utilisation of machines and installations in the Dutch manufacturing industry is 82.1 percent. This is 0.7 percent higher than in January. Capacity utilisation rose in companies producing semi-manufactured products and investment goods. Nineteen percent of manufacturing companies are experiencing bottlenecks in the production process; just as in previous months these are mostly because of insufficient demand. Manufacturers do report a slight improvement in their competitive position. They expect more turnover from abroad.

Business services more positive about orders and turnover

Companies in the business services sector also expect more orders and a higher turnover in the second quarter. The net percentage of optimists increased further and has reached its highest score since April 1998. The optimism is in all three sectors of business services measured: computer service agencies, lease companies and the sector other business services, which includes temp agencies, advertising agencies, cleaners, consulting engineers and accountants and administrative offices.

Over half of services want more staff

About 42 percent of companies in the business services sector want to employ more people in the second quarter of 2006, while only 5 percent expect to have to reduce staff. Business services have not been this positive about employment in their branch since July 1998. In the last five quarters, too, they expected to expand staff in the subsequent quarter. Looking back, they actually did recruit more people.