Confidence Dutch manufacturers plummeted

The mood among Dutch manufacturers fell by an unprecedented number of points for the second month in a row. After a drop of 5.4 points in September, the producer confidence index plummeted 5.6 points in October. This is the most substantial decrease since 1985, the first year the index was calculated. Producer confidence is now -6.1, the lowest level in the last five years.

Producer confidence consists of three component indicators: expected output in the next three months, producers’ opinions about their stocks of finished products and their opinions on their order books. Compared with September, all three components deteriorated substantially in October.

Manufacturers were substantially more pessimistic with respect to their future output. Their opinions on the stock of finished products were also much more sombre; more manufacturers view their stocks as large. Manufacturers’ opinions on order positions deteriorated, too, and are negative for the first time since August 2005.

In October, the number of manufacturers reporting a decrease in orders received was significantly higher than the number reporting an increase. The order position index (orders received expressed in months of work) diminished slightly. With a score of 113.2, the index retains its high level.

According to Dutch manufacturers, their competitive position on the domestic market has hardly changed in the last three months. However, they expect fewer sales on the foreign market in the next three months. The degree of capacity utilisation was slightly lower than July, falling from 83.4 to 83.0 percent. The percentage of manufacturers who consider insufficient demand to be an obstruction for production grew from 8 in July to 16 in October.

Producer confidence in manufacturing industry