Recovery of producer confidence is faltering in October

After five consecutive months in which confidence among Dutch manufacturers improved, confidence deteriorated slightly in October. Producer confidence now stands at -5.6, down from -4.8 in September, as reported today by Statistics Netherlands (CBS). Manufacturers are more negative about their future output.

The long-term average over the past two decades is 0.3. Producer confidence reached an all-time high (10.9) in February 2018 and 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)
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
2020August-5.4
2020September-4.8
2020October-5.6

Manufacturers again more negative about future output

In October, manufacturers’ opinions on future output have deteriorated slightly for the third consecutive month. However, they are less negative about their order position and more positive about their stocks of finished products.

Manufacturers’ opinions on their stocks of finished products are positive. There are fewer manufacturers who define their current stocks of finished products as too large rather than too small.

The other two component indicators are negative. Manufacturers who anticipate output to decrease over the next three months outnumber those expecting output to increase. More manufacturers consider their order position to be weak rather than strong, given the time of year.

Producers in timber and building materials industry most positive

Producers in the timber and building materials industry are the most positive. It is notable that the entrepreneurs in the transport equipment industry are positive as well. In the other industries, producers are not positive. The most negative opinions are again found among entrepreneurs in the metal industry.

Producer confidence by sector (seasonally adjusted)
 October 2020 (average of the component questions)September 2020 (average of the component questions)
Timber and building materials6.112.3
Transport equipment1.4-5.3
Petroleum03.3
Paper and printing-1.4-4.6
Food, beverages, tobacco-4.3-3.1
Textiles, clothes, leather-7.4-1.9
Electrotechnical products and machinery-7.4-6.5
Metal-9.3-11.3

Capacity utilisation rate higher

The industrial capacity utilisation rate stood at 79.2 percent at the start of Q4 2020. This was higher than the 76.9-percent rate at the start of Q3. The long-term average over the past two decades is 81.3 percent.

Capacity utilisation rate, first month of the quarter
   Capacity utilisation rate (%)
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
2020Quarter 479.2

Manufacturing output 4 percent down in August

In August 2020, the average daily output generated by the Dutch manufacturing industry was 4.0 percent down on August 2019. The year-on-year decrease is smaller than in the previous four months.

Confidence among German manufacturers continues to improve

Germany is an important foreign market for the Dutch manufacturing industry. According to the Business Climate Index of the IFO Institute, producer confidence has improved in October for the sixth consecutive month and is back in positive territory for the first time since June 2019. A great many more companies were satisfied with their current situation. However, recent optimism about the coming months has evaporated. In the past quarter, capacity utilisation increased considerably, from 75.3 points to 79.8 points. In August, the average daily output generated by the German industry contracted by almost 12 percent year-on-year, as reported by Destatis.

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