Economy enters recession stage

© Hollandse Hoogte / Stijn Rademaker
According to the CBS Business Cycle Tracer, the economic situation in mid-May is one of rapid deterioration. The economy has entered a business cycle low. Statistics Netherlands (CBS) reports that twelve of the thirteen indicators in the Tracer as published mid-May are performing below the level of their long-term trend. Measures that were implemented to curb the COVID-19 pandemic have severely affected many indicators, beginning in the reporting month of March.

The CBS Business Cycle Tracer is a tool used to monitor the situation and development of the Dutch business cycle. It uses thirteen key macro-economic indicators. Together, these provide a coherent macro-economic picture which is based on CBS figures published over the past month or quarter. This is a macroeconomic outlook which does not apply equally to all households, businesses or regions.

Business Cycle Tracer indicator (unweighted average of the indicators in the CBS Business Cycle Tracer)
YearMonthcycle (distance to the long-term trend (=0))
2012January-0.03
2012February-0.09
2012March-0.12
2012April-0.15
2012May-0.23
2012June-0.3
2012July-0.36
2012August-0.47
2012September-0.56
2012October-0.64
2012November-0.76
2012December-0.86
2013January-0.94
2013February-1.06
2013March-1.14
2013April-1.19
2013May-1.27
2013June-1.29
2013July-1.3
2013August-1.29
2013September-1.22
2013October-1.15
2013November-1.07
2013December-0.99
2014January-0.93
2014February-0.88
2014March-0.85
2014April-0.84
2014May-0.83
2014June-0.82
2014July-0.81
2014August-0.79
2014September-0.78
2014October-0.76
2014November-0.73
2014December-0.68
2015January-0.64
2015February-0.59
2015March-0.53
2015April-0.49
2015May-0.43
2015June-0.38
2015July-0.34
2015August-0.3
2015September-0.27
2015October-0.26
2015November-0.25
2015December-0.24
2016January-0.25
2016February-0.23
2016March-0.22
2016April-0.21
2016May-0.17
2016June-0.14
2016July-0.11
2016August-0.05
2016September-0.01
2016October0.03
2016November0.08
2016December0.12
2017January0.16
2017February0.21
2017March0.26
2017April0.3
2017May0.36
2017June0.39
2017July0.42
2017August0.48
2017September0.51
2017October0.55
2017November0.6
2017December0.65
2018January0.69
2018February0.74
2018March0.79
2018April0.8
2018May0.82
2018June0.83
2018July0.81
2018August0.81
2018September0.8
2018October0.77
2018November0.75
2018December0.71
2019January0.65
2019February0.61
2019March0.57
2019April0.54
2019May0.52
2019June0.49
2019July0.47
2019August0.43
2019September0.39
2019October0.35
2019November0.32
2019December0.3
2020January0.31
2020February0.29
2020March0.21
2020April0.19
2020May-1.46

Historic drop in consumer and producer confidence

Both consumer and producer confidence showed the sharpest decline ever recorded over one month in April 2020. Both are below their long-term averages.

Consumer and producer confidence (seasonally adjusted)
YearMonthConsumer confidence (average of the component questions)Producer confidence (average of the component questions)
2016January113.2
2016February73.1
2016March23.9
2016April64.7
2016May74.4
2016June115.4
2016July95.1
2016August91.2
2016September123.4
2016October174.3
2016November213.4
2016December214.7
2017January216
2017February227
2017March247.8
2017April268.3
2017May236.1
2017June237.2
2017July256.6
2017August265.4
2017September238.5
2017October238.2
2017November229.1
2017December258.9
2018January2410.3
2018February2310.9
2018March249.5
2018April258.2
2018May239.8
2018June237.7
2018July236.3
2018August215.9
2018September195.7
2018October155.9
2018November137.2
2018December97.5
2019January05.8
2019February-26.3
2019March-46.1
2019April-36.7
2019May-34.7
2019June03.3
2019July 23.9
2019August03.9
2019September-23.3
2019October-13.6
2019November-22.8
2019December-22.9
2020January-32.5
2020February-23.7
2020March-20.2
2020April-22-28.7

More investments, exports stable, lower household consumption

In Q1 2020, the volume of investments in fixed assets was 0.9 percent up on the same quarter last year. Investments in infrastructure, office buildings and machinery grew in particular. However, investments in transport equipment such as passenger cars, lorries and semi-trailers declined.

Exports of goods and services were at the same level as in Q1 2019. In the previous quarter, exports still grew by 3.2 percent. Exports of chemical products, electrotechnical machinery and appliances were up in the first quarter of this year, while exports of transport equipment and natural gas declined year-on-year.

In Q1 2020, Dutch consumers spent 1.3 percent less than one year previously. It was the first decline in six years’ time. In March, household consumption fell by as much as 6.7 percent (adjusted for shopping days), after two consecutive months of growth. In Q1, consumers mainly spent less on services (accommodation and food services, recreation and culture in particular) and clothing. They did spend more on food, however. In mid-March, cafés and restaurants were required to close their doors; shopping streets were almost empty. On the other hand, supermarkets recorded a higher turnover.

Manufacturing output 2.5 percent down in March

In March 2020, the average daily output generated by the Dutch manufacturing industry was 2.5 percent down on the same month last year. Output showed a year-on-year decrease of 1.3 percent in the preceding month.

Figures over the reporting month of March only partly reflect the impact of the COVID-19 outbreak. Producer confidence in March was still recorded as positive, for example.

More bankruptcies in April

The number of corporate bankruptcies, adjusted for court session days, has increased. There were 75 more bankruptcies in April than in the previous month. The trend has been slightly upward since September 2018.

The figures for the reporting month of April do not yet or barely reflect the effects of the coronavirus outbreak. Several weeks may pass between the date of filing for bankruptcy and the court decision. As of week 14, Dutch courts are granting a longer application period of at least four weeks in cases of a bankruptcy petition being made (i.e. by claimants), unless the procedures are deemed urgent. In addition, the Dutch government has established an emergency package for the economy and the job market in order to provide the proper support to Dutch businesses.

Number of jobs continues to grow

In Q1 2020, the number of full-time and part-time jobs held by employees and self-employed rose by 23 thousand to 10,773 thousand jobs. This is an increase of 0.2 percent relative to the previous quarter and the lowest increase since Q1 2016. Compared to Q1 2019, the number of jobs grew by 135 thousand, an increase of 1.3 percent. Figures include the jobs of those people who are unable to work due to the COVID-19 crisis but who still get paid.

At the end of March, the number of unfilled job vacancies stood at 226 thousand, down by over 60 thousand compared to the previous quarter. This is the first quarter-on-quarter decline in seven years and also the largest in absolute numbers ever measured.

Tension in the labour market has fallen slightly. In Q1 2020, there were on average 82 job vacancies per 100 unemployed. In Q4 2019, there were still 91 unfilled vacancies per 100 unemployed.
Unemployment (according to the ILO definition) fell by 39 thousand to 277 thousand in Q1. This means that 3.0 percent of the labour force were unemployed.

GDP (volume), seasonally adjusted
YearQuarterIndex (2010=100)
2013Quarter 1100.1
2013Quarter 299.9
2013Quarter 3100.5
2013Quarter 4101.1
2014Quarter 1101
2014Quarter 2101.6
2014Quarter 3101.9
2014Quarter 4102.8
2015Quarter 1103.4
2015Quarter 2103.7
2015Quarter 3104.1
2015Quarter 4104.1
2016Quarter 1105.1
2016Quarter 2105.3
2016Quarter 3106.5
2016Quarter 4107.4
2017Quarter 1107.9
2017Quarter 2108.9
2017Quarter 3109.7
2017Quarter 4110.5
2018Quarter 1111.2
2018Quarter 2111.9
2018Quarter 3112.2
2018Quarter 4112.9
2019Quarter 1113.4
2019Quarter 2113.8
2019Quarter 3114.2
2019Quarter 4114.7
2020Quarter 1112.7

GDP contraction of 1.7 percent in Q1 2020

According to the first estimate of GDP conducted by CBS, gross domestic product (GDP) contracted by 1.7 percent in Q1 2020 relative to the previous quarter. The decline was mainly due to lower consumption by households. GDP declined by 0.5 percent relative to Q1 2019.

On Wednesday 24 June 2020, CBS will publish the second estimate of GDP and employment over Q1 2020.