The Dutch economy saw robust growth in the first quarter of 2006. The gross domestic product (GDP) was up by 2.9 percent on the year before. It is the highest growth rate in over five years. Employment is also increasing more rapidly, with 85 thousand more jobs a year earlier. This is shown by the first estimate of the quarterly accounts by Statistics Netherlands.
Exports contributed substantially again to the economic recovery in the first quarter of 2006. The increase in household consumption was another major impulse. Investments were up as well.
Modest quarter-on-quarter growth
The volume of GDP in the first quarter of 2006, corrected for calendar and seasonal effects, was 0.2 percent higher than in the fourth quarter of 2005. The first quarter of 2006 had two working days more than the first quarter of 2005. The 0.2 percent quarter-on-quarter growth is clearly less than in the previous three quarters. The quarter-on-quarter figures of the previous quarters were sometimes adjusted considerably by adding the new quarter.
Exports growing faster
The volume of the exports of goods and services was up by 7.1 percent in the first quarter on the year before. The export rose slightly more than the 5.9 percent average of 2005. The growth is mainly due to re-exports. Re-exports consist of goods manufactured elsewhere, such as China, Taiwan or the USA, which are distributed from the Netherlands after having undergone some minor processing. Dutch manufactured exports also grew substantially though.
The import growth rate (7.2 percent) was almost identical to that of the exports. The import growth was not just due to the re-exports but also to the recovery of domestic expenditure and production.
Hike in household consumption
Households spent 2.9 percent more in the first quarter of 2006 than in 2005. This figure is corrected for price changes and changes in the health care system. It is the highest growth rate in years. People spent about 8 percent more on durable consumer goods. Not only consumer electronics, furniture and clothing but also cars were more in demand.
Slight increase in government consumption
The volume of government consumption in the first quarter of 2006 was up by 0.4 percent in the same quarter of 2005. This is almost identical to the 2005 average growth rate. Real expenditure on health care increased, those on public government decreased.
Also more investments in machinery, buildings and commercial vehicles
In the first quarter of 2006 investments were up by 3.4 percent on the same quarter of 2005. The recovery of investments is supported more widely now. There was substantially more investment in dwellings and in computers. There was also more investment in machinery, trucks and commercial property, where investments were down in 2005.
Private sector produced production growth
The production growth is due to the producers of goods and commercial services. After a slightly negative growth in 2005, industrial production is growing again, lifted by the manufacture of food and basic chemicals. The construction industry benefited from the recovery in housing construction and a slight increase in commercial building. Substantially more natural gas was extracted for the international and the domestic market. In commercial services that growth is mainly produced by wholesale trade and the transport sector, which benefit from the re-exports, and by temporary agencies. Also the production by commercial service providers such as computer service bureaus and advertising agencies increased. Thanks to care the production in non-commercial services also increased somewhat.
In the first quarter of 2006 there were 85 thousand jobs of employees more than the year before (1.2 percent). Converted to fulltime equivalent jobs the growth rate is slightly lower (0.7 percent). The main cause of this difference is growth rate is the very strong increase in the number of temp jobs. People working for temp agencies often work part-time. After seasonal adjustment, the number of jobs in the first quarter was up by 0.6 percent on the fourth quarter of 2005. This shows that the job growth is speeding up.