Producer confidence in decline

27/07/2004 09:30

Producer confidence in manufacturing industry fell to 0.5 in July 2004, slightly below June’s 1.9. The upward trend since the low point in June 2003 was interrupted for the second time by the decline in July. The first time was in February 2004. Nevertheless, the underlying trend is positive as figures published by Statistics Netherlands show.

Entrepreneurs in business services are optimistic about anticipated turnover and orders for the third quarter. They also expect employment to rise in their sector.

Manufacturers anticipate production to fall off

Producer confidence reflects the mood in manufacturing industry and consists of three component indicators: expected production in the three months to come, opinions on stocks of finished product and opinions on the order position. Compared to last month production in the next three months is anticipated to deteriorate. Opinions on order positions, on the other hand, improved. Opinions on stocks of finished product hardly changed.

More orders

Manufacturers reported to have received more orders in June than in May. The increase in received orders is solely caused by an increase in export orders. Manufacturers expect a modest rise in export orders in the third quarter. The volume of order portfolios, corrected for seasonal effects, is slightly better than in June.

Order portfolios of producers of consumer goods declined marginally which is not exceptional for this time of year. Producers think orders received as well as order position are slightly less negative than in the preceding months. Producers of consumer goods are more pessimistic than producers of semi-manufactured goods and investment goods.

One in eight manufacturers expect to have to cut back on staff, whereas one in fourteen intend to recruit new staff. Producers of semi-manufactured goods expect to have to raise their prices, just like in the preceding months. Producers think that price developments on the steel market will give rise to higher selling prices.

Higher capacity utilisation rate

The capacity utilisation rate of machines and production installations in Dutch manufacturing industry rose to 83.1 percent. The rate rose for the fourth consecutive quarter. According to manufacturers their competitive position on the domestic and foreign market improved. One in five think they still suffer impediments to production. Just like in the previous quarters insufficient demand is pinpointed as the main cause.

Business services sector more optimistic

Entrepreneurs in the business services sector expect to increase turnover and receive more orders in the third quarter of 2004. They reported a higher turnover and more orders received in the second quarter compared to the first quarter of this year. This applies in particular to computer services and other business services (including temp agencies, cleaning services and auditing and administrative services). A net one in six entrepreneurs had to cut back on staff in the second quarter of 2004. For the first time since the second quarter of 2002 entrepreneurs expect to increase staff. Employment in lease companies is still under pressure, but employers in computer services expect to have to recruit new staff.

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