Manufacturers and business service providers remain optimistic

26/01/2006 09:30

Producer confidence in manufacturing industry stands at 3.0 in January 2006, thus equalling the level of December 2005. Manufacturers are more optimistice about future output and the position of their stocks than in December, but slightly more pessimistic about their order positions. Fewer manufacturers anticipate lay-offs.

According to figures published by Statistics Netherlands, the sector business services expects higher turnovers and more orders in the first quarter of 2006. They also plan to hire new staff.

Manufacturing industry more confident about future output

Producer confidence is the mood indicator of manufacturers. The figure consists of three component indicators: expected output in the next three months, producers’ opinions about stocks finished products and opinions about their order positions.

Producer confidence in Dutch manufacturing industry is 0.4 points higher in January than in December and equals November’s level. It remains relatively high for the fourth consecutive month and has not been this high since early 2001, when the boom in Dutch economy began to peter out.

In January Dutch manufacturers, particularly manufacturers of semi-fabricated goods, are more optimistic with respect to their future output. Producers of investment goods are also slightly more positive about the position of their stocks. Manufacturers are, on the other hand, more negative about their order positions. This applies in particular to producers of consumer goods.

Staff reductions no longer anticipated

Due to sustained producer confidence, manufacturers are less inclined to cut back on staff. Only 13 percent intend to reduce staff, whereas 9 percent have plans to recruit new staff in the coming quarter. Producers in manufacturing industry have not been so positive since June 2001.

An increasing number of manufacturers expect higher prices. In January, 23 percent expect to raise prices of their products, as against 11 percent who expect lower prices. Producers of investment goods and semi-fabricated goods expect higher prices, producers of consumer goods, on the other hand, anticipate prices to fall.

Capacity utilisation rate down

The capacity utilisation rate in Dutch manufacturing industry is 81.4 percent in January, i.e.. 0.7 percent down on October 2005. January’s rate is the lowest since October 2003. The sector investment goods was mainly accountable for the decline.

About 18 percent of manufacturers are faced with production barriers. Just like in previous quarters, insufficient demand is the main cause. Manufacturers think their competitive positions at home as well as on the European market have marginally improved. They expect to realise higher turnovers abroad.

Sector business services expects more orders and higher turnovers

Providers of business services also expect improvement of their order positions and higher turnovers in the first quarter of 2006. This sector comprises computer service bureaus, lease companies and the sector ‘other business services’, which includes temp agencies, advertising agencies, cleaning services, engineering offices, auditor offices and administrative offices.

One third of business service providers expect to raise prices in the first quarter of 2006, by far the highest proportion over the last 3 years.

Service providers foresee highest personnel growth since 1998

Approximately 39 percent of providers of business services intend to recruit personnel in the first quarter of 2006, whereas only 10 percent anticipate staff cuts. Business service providers have not been so optimistic since October 1998. In the past four quarters, this sector also expected to have to recruit new staff. This quarter their expectations materialised.