The slight growth in the Dutch economy in 2005 was mainly caused by exports. The volume of goods exports was larger than in 2004, but the growth levelled out somewhat compared with the growth in 2004. The development of the volume of exports shows continued growth in the first months of 2006. The Business Sentiment Survey’s indicator reflecting producers’ opinions on their orders from abroad points towards a continuing growth of the volume of exports.
Exports in the Business Cycle Tracer
The volume of exports is one of the fifteen indicators of Statistics Netherlands’ Business Cycle Tracer. Statistics Netherlands uses this Tracer to determine among other things the state and the course of the Dutch economy. The tracer is made up of four quadrants, one for each phase of the business cycle.
The exports indicator has been in the green quadrant since September 2004, in other words the value is above the long-term average of the indicator, and increasing compared with the previous period. Exports was one of the first indicators in the tracer which showed signs of the present period of economic recovery. To visualise the changes in the separate indicators, the Business Cycle Tracer uses the so-called trend cycle.
Exports trend cycle points to increasing growth
A trend cycle gives a better picture of changes in the medium to long term than an unadjusted series. The trend cycle show that the volume growth of exports started to increase again at the beginning of 2006, after having levelled out in the first half of 2005.
The original series is more jagged because of the working day patterns, seasonal effects and incidental fluctuations. In the trend cycle these have all been eliminated, resulting in a smoother line reflecting changes in exports. For short-term developments, the series adjusted for working day effects is the most relevant. This series has been adjusted for public holidays, leap days and the difference between weekdays and weekend days.
Volume of goods exports, working day adjusted and trend cycle
Order books indicate further growth for goods exports
The Business Sentiment Survey indicator “opinion on foreign orders” shows quite a good correlation with goods exports. About 45 percent of goods exports consists of goods produced by the Dutch manufacturing industry. According to the Business Sentiment Survey of April 2006, manufacturers remained satisfied with their foreign orders. This may indicate that the growth of the volume exports will continue unabated.
Manufacturers’ opinions on foreign orders and volume of goods exports
The Business Sentiment Survey is a monthly survey which puts qualitative questions to a panel of companies in the manufacturing sector. They are asked to answer various questions concerning their opinions and expectations. There are three response categories; positive, neutral and negative. The opinion on foreign orders is based on the question of whether, taking into account the time of year, the foreign orders are above normal, normal or below normal. The indicator is calculated as the weighted percentage of companies with orders above normal minus the weighted percentage with orders below normal.
One main advantage of the Business Sentiment Survey is that the results become available very quickly. The indicator “opinion on foreign orders” is already available at the end of the month under review. Figures on volume of exports are only published one and a half months after the end of the month under review. The indicator from the Business Sentiment Survey can therefore give a preliminary indication of the way exports volume will move.