Producers’ confidence in the manufacturing industry has deteriorated substantially in June, and is now -1.7. In May it was still 0.8. Producers’ confidence has now reached at its lowest level since March 2004. Manufacturers are more pessimistic about expected production, stocks of finished products and orders, according to figures form Statistics Netherlands.
More negative on production, stocks and orders
Producers’ confidence is a sentiment indicator for the manufacturing industry. It consists of three components: expected production in the coming three months, opinions on stocks of finished product and opinion on the orders position.
Producers’ confidence in the manufacturing industry is 2.5 points lower in June than in May. This is the largest monthly decrease in two years. Producers of semi-manufactured products, in particular, are more negative about expected production in the coming three months. Producers of consumer goods are also slightly less positive on this aspect. Producers of investment goods are more positive about the future, however. All producers are more negative about their order books, while producers of semi-manufactured products are particularly dissatisfied with their stocks of finished product.
Manufacturers expect to lower prices
One in nine manufacturers expect the prices of their products to decrease, while one in twenty expect them to increase. Producers of semi-manufactured products, in particular, expect lower prices. In 2004 the group of manufacturers who expected prices to increase was much larger than those who expected lower prices. This was the other way around in the second quarter of 2005.
One in six manufacturing companies expect to have to reduce staff in the coming months, while only one in fourteen intend to employ more people. These proportions have hardly changed since the beginning of last year. April 2001 was the last time that more manufacturers expected to expand than to reduce staff.
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