Fall in Dutch manufacturing output

03/09/2001 10:00

Growth rates of manufacturing production have tumbled considerably in the course of this year. The trend figures for manufacturing have been lower every month since January. In the second quarter of this year, the volume of manufacturing output was even 0.1% smaller than in the same quarter last year. The increase rate had already fallen from 4.0% in the fourth quarter of last year to 1.8% in the first quarter of this year. The growth rates were lower in the first six months of this year than in the same period last year for all industry classes. In the food industry production volume was 1.0% down on the first half of 2000, partly because of the foot-and-mouth crisis. In paper and publishing, too, output was lower than in the same period last year. The decrease in growth was smallest in the metal industry.

Manufacturing production (volume)
Percentage change on same month previous year

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Business cycle

Developments in the manufacturing industry are more important for the economic cycle than the share of this sector in the gross domestic product suggests. The share of the manufacturing industry in the Dutch gross domestic product is at present about 17%, and with 1.1 million jobs the sector accounts for 14% of employment. These shares have gradually declined in the last decades, as the Dutch economy has become more and more dependent on the services industry. However, cyclical fluctuations in manufacturing are much stronger than in other sectors of industry. While quarterly economic growth ranged between zero and five percent in the 1990s, manufacturing output rose by nine percent in one quarter and fell by three percent in the next. One of the reasons for this is that the manufacturing industry is more sensitive to developments on the world market.

Manufacturing dip international

Outside the Netherlands, too, manufacturing output has been slowing down, limiting the possibilities for the export of Dutch manufactured products. Eurozone countries put on a final production sprint in the last month of 2000, but since January the growth rates have fallen further every month and in May growth in the Eurozone came to a standstill. Apart from the December blip, the development was the same for the manufacturing industry in the United States only occurring a few months earlier. Since March 2001 production volume has been smaller each month than twelve months previously and the decrease in June was nearly 4%. Like Dutch producers of durable consumer goods, those in the US have also been hit hard. After a 10% rise last year, growth stopped completely in the first half of this year.

Manufacturing production (volume)
Percentage change on same month previous year

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Frans van Ingen Schenau