Economic situation remains worrying

The economic situation at the end of July was about the same as at the end of June. Unemployment rose dramatically, but new orders in manufacturing industry, exports and bankruptcies were less negative than anticipated. The heart of the indicators in the Business Cycle Tracer is firmly located in the recession stage.

In the first quarter of 2009, the economy contracted by 4.5 percent. This is the most substantial downturn in well over 60 years. Exports and investments were severely hit. The economy shrank 2.6 percent relative to the preceding quarter. This is the most substantial quarter-on-quarter contraction ever observed.

The indicator reflecting the mood among Dutch consumers remained stable at -24 in July relative to the preceding month. The mood among manufacturers also remained stable. Producer confidence was -14.8, as against 15.0 in June. The mood gradually improved after an all-time low in February, but it is still negative. Providers of business services remained low spirited.

In June 2009, capital market interest averaged 4.0 percent, i.e. 0.1 percentage points higher than in May. The Dutch inflation rate dropped for the third month in a row to reach 1.4 percent. In June, selling prices in manufacturing industry were nearly 14 percent down on one year previously.

Manufacturing output dropped by 13 percent in May, relative to May 2008. The volume of goods exports was over 10 percent down on twelve months previously. This decline is slightly smaller than in the first four months of 2009, when the volume of exports was about 13 to 15 percent lower. Consumption expenditure is invariably low. Dutch households spent 3.6 percent less in May than one year previously.

Unemployment is rising sharply. In the period April – June, seasonally adjusted unemployment averaged 368 thousand. There were 23 thousand more jobs in the first quarter of 2009 than in the first quarter of 2008, a 0.3 percent increase. The growth rate has slowed down considerably relative to the preceding quarters. The number of job vacancies plummeted for the second quarter running. The number of hours worked in temp jobs decreased substantially in the first quarter of 2009.

Gross domestic product (GDP)