Producer confidence continues to rise in July

© Hollandse Hoogte
In July, confidence among Dutch manufacturers is again less unfavourable. Producer confidence now stands at -8.7, up from -15.1 in June, as reported today by Statistics Netherlands (CBS). Expectations on future output have improved again and are positive for the first time since March 2020.

The long-term average over the past two decades is 0.5. Producer confidence reached an all-time high (10.9) in February 2018 and reached an all-time low (-28.7) in April 2020. Pessimism has prevailed among Dutch manufacturers since April 2020.

Producer confidence manufacturing industry (seasonally adjusted)
yearmonthbalance (average of the component questions)
2016August1.2
2016September3.4
2016October4.3
2016November3.4
2016December4.7
2017January6
2017February7
2017March7.8
2017April8.3
2017May6.1
2017June7.2
2017July6.6
2017August5.4
2017September8.5
2017October8.2
2017November9.1
2017December8.9
2018January10.3
2018February10.9
2018March9.5
2018April8.2
2018May9.8
2018June7.7
2018July6.3
2018August5.9
2018September5.7
2018October5.9
2018November7.2
2018December7.5
2019January5.8
2019February6.3
2019March6.1
2019April6.7
2019May4.7
2019Juni3.3
2019Juli 3.9
2019August3.9
2019September3.3
2019October3.6
2019November2.8
2019December2.9
2020January2.5
2020February3.7
2020March0.2
2020April-28.7
2020May-25.1
2020June-15.1
2020July-8.7

Opinions on future output slightly positive

In July, opinions on future output have again improved substantially, and are positive for the first time since March 2020. The unprecedented downturn in April has been completely reversed within a period of three months. Manufacturers are also less negative about their order position. However, their opinion on stocks of finished products remain virtually unchanged and equally negative.

Future output is the only component indicator of producer confidence that is positive. Manufacturers who anticipate output to increase over the next three months outnumber those expecting output to decline. The other two component indicators are negative. More manufacturers consider their order position to be weak rather than strong, given the time of year. There are more manufacturers who define their current stocks of finished products as too large rather than too small.

Future output (seasonally adjusted)
yearmonthbalance (balance % positive and % negative answers)
2016August-1
2016September3.4
2016October8.7
2016November4.9
2016December5.9
2017January6.2
2017February8.3
2017March9.7
2017April9.8
2017May6.1
2017June7.1
2017July6
2017August4.9
2017September12.2
2017October9.8
2017November9.6
2017December7.4
2018January13.3
2018February16
2018March12.6
2018April9
2018May13.3
2018June8.3
2018July5
2018August4.3
2018September3.3
2018October5.2
2018November6.7
2018December10
2019January5.6
2019February3.6
2019March2.8
2019April3.3
2019May0.9
2019June-1.2
2019July-0.1
2019August2
2019September2
2019October3.1
2019November1.4
2019December0.4
2020January1.8
2020February3.1
2020March-8
2020April-65
2020May-44.9
2020June-14.7
2020July1.1

Confidence increases among producers in all sectors

In all sectors of the industry, producer confidence is less negative than it was in June. In the timber and building materials industry the confidence indicator has turned positive again. Furthermore, a sharp increase in confidence is seen mainly in the textiles, clothes and leather industry. The most negative opinions are found among entrepreneurs in the metal industry. Confidence of producers in the electrotechnical products and machinery industry has hardly improved.

Producer confidence by sector (seasonally adjusted)
 July 2020 (average of the component questions)June 2020 (average of the component questions)
Timber and building materials5.5-1.3
Paper and printing-1.8-14.2
Food, beverages, tobacco-4.3-12.7
Petroleum-5.4-14.7
Transport equipment-5.6-11.6
Textiles, clothes, leather-6.2-27.3
Electrotechnical products and machinery-8.2-8.3
Metal-20.4-28.8

Capacity utilisation rate slightly higher

The industrial capacity utilisation rate stood at 76.9 percent at the start of Q3 2020. This was slightly higher than the 74.2-percent rate at the start of Q2, but it was still the second lowest capacity utilisation rate in over 7 years.

Capacity utilisation rate, first month of the quarter
   Capacity utilisation rate (%)
2016Quarter 482.2
2017Quarter 181.3
2017Quarter 282.8
2017Quarter 383.4
2017Quarter 483.3
2018Quarter 183.5
2018Quarter 283.6
2018Quarter 384.5
2018Quarter 484.1
2019Quarter 183.9
2019Quarter 284.3
2019Quarter 384.3
2019Quarter 484
2020Quarter 182.7
2020Quarter 274.2
2020Quarter 376.9

Manufacturing output 12.5 percent down in May

In May 2020, the average daily output generated by the Dutch manufacturing industry was 12.5 percent down on May 2019. Output showed the largest year-on-year decline in over 11 years.

Confidence among German manufacturers also improving for third consecutive month

Germany is an important foreign market for the Dutch manufacturing industry. According to the Business Climate Index of the IFO Institute, in July producer confidence has improved for the third month in a row. Both opinions on future output and opinions on the current situation are less negative compared to the previous month. The capacity utilisation rate improved in Germany as well, from 70.4 percent to 74.9 percent. In May, the average daily output generated by the German industry contracted by almost 24 percent year-on-year, as reported by Destatis.

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