According to the first estimate of Statistics Netherlands’ quarterly accounts, the Dutch economy grew by 0.9 percent in the third quarter of 2005. The gross domestic product (GDP) was 0.9 percent higher than one year previously. Employment was 0.2 percent lower than in the same period last year, although the fall in the number of jobs was much smaller than in previous quarters.
GDP was not only pushed up by an increase in exports, but also by higher household spending and increasing investment spending. Government consumption was lower.
Quarter-on-quarter growth 0.3 percent
After correction for seasonal and working day effects, the volume of GDP in the third quarter was 0.3 percent up on the second quarter of 2005. This quarter on-quarter growth is moderate. In the last two quarters GDP underwent extreme positive and negative changes.
Export growth rate down slightly
The export volume of goods and services was 4.7 percent higher in the third quarter of 2005 than twelve months previously. This increase is slightly smaller than in the first half of the year. The increase is almost completely on account of re-exports, i.e. the export of goods produced elsewhere, for example China, the US and Taiwan. These are distributed via the Netherlands after having undergone some small form of processing, or no processing at all in the Netherlands. The growth in exports of Dutch produced goods was very modest in the third quarter and clearly below that in the first six months of this year.
The increase in imports (4.6 percent) was nearly equal to that in exports. This increase was also a direct effect of re-exports.
Highest household consumption for three years
Households spent 1.0 percent more after adjustment for price changes in the third quarter of 2005 than in the same quarter last year. This is the largest growth since the third quarter of 2002. Dutch consumers spent more on goods in particular. Both spending on food, drink and tobacco, and that on durable goods were higher than last year. Consumers spent more on consumer electronics, furniture and clothes in particular. They spent less on new cars, however. Households also spent more on services, but just as in previous quarters the increase was relatively limited.
Government consumption down
The volume of government consumption was 0.5 percent lower in the third quarter than in the same quarter last year. Government spending was down for education, and especially for public administration and defence. Real expenditure on care and welfare did increase, but by much less than in previous years.
Investment picking up
Fixed capital formation was 3.4 percent higher in the third quarter of 2005 than in the same quarter last year. To an important extent this was caused by higher investment in construction: housing construction is picking up. Companies also invested more in machines and installations, company buildings, infrastructure and company cars. Spending on computers was extremely high.
Construction and commercial services push up production
From the point of view of production, the construction industry and commercial services are the basis of the modest economic growth. Construction benefited from the pick-up in housing construction. In commercial services the growth is mainly caused by wholesale trade, which is involved in re-exports, and the temp agency branch. Production growth in non-commercial services (government and care) was very small.
Manufacturing production was almost the same as last year and is thus lagging behind other periods of recovery. The chemical industry recovered, but there was a fall in electrical engineering and transport equipment. Natural gas production was up substantially as much less gas was exported. In agriculture, crops were smaller than last year.
Job losses at a standstill
There were 13 thousand fewer jobs (0.2 percent) in the third quarter of 2005 than twelve months previously. In terms of full-time equivalents, the drop was relatively larger, at 0.5 percent. This is the tenth quarter in succession that the number of jobs is smaller than twelve months previously. After correction for seasonal effects, the number of jobs was even fractionally higher in the third quarter than in the second quarter of this year.