Producer confidence improves significantly

Manufacturing companies are more optimistic in July than they were last month. The producer confidence index stood at 8.9 in July, the highest level since early 1985. In the past twelve months producer confidence improved substantially.

Producer confidence is the mood indicator for the manufacturing industry. The figure consists of three component indicators: expected production over the next three months, manufacturers’ opinions on the stock of finished products and the order position. Figures on producer confidence are seasonally adjusted.

In July 2006, manufacturers were more positive about all three component indicators. They were particularly confident about their order position. The order books of Dutch manufacturing industry, expressed in months of work, have not been this full since January 1993. An increasing number of manufacturers are pleased with the state of their order books. Manufacturers indicate that their competitive position on both the domestic and foreign market has improved.

The positive mood is found across all sectors of manufacturing industry. Most branches evaluated their opinions on the three component indicators as more positive than in June 2006. Producers of investment goods in particular are content with their order position. Their orders received from abroad increased strongly.

In July, 11 percent of manufacturing companies expect employment to increase in the coming three months, whereas 13 percent of manufacturers expect staff reductions. Among producers of investment goods, those who expect to recruit staff clearly outnumber those who expect to have to reduce staff.

Producer confidence in manufacturing industry