Manufacturing capacity utilisation increasing again

Following an unprecedented relapse in the first half of 2009, capacity utilisation in the Dutch manufacturing industry started to rise again at the beginning of 2010. The manufacturing industry in Europe is still using less of its capacity than it has in recent years. The Dutch manufacturing industry has one of the highest utilisation rates in Europe.

Manufacturing capacity utilisation, after seasonal adjustment

Exceptional plunge in 2009

At the beginning of the second quarter of 2010, the capacity utilisation rate was higher than one year previously in nearly all countries in Europe. In April 2009, utilisation was exceptionally low however. capacity utilisation has fallen in previous periods of economic recession, but usually more gradually and not nearly as substantially.

The utilisation rate of production installations is one of the factors that manufacturing companies take into account when making investment decisions. As capacity utilisation and confidence of manufacturers are higher, producers will invest more. Just as in other countries, private sector investment in the Netherlands dropped sharply in 2009. In the first quarter of 2010, too, manufacturing companies invested substantially less.

Producers’ confidence in the manufacturing industry has improved steadily in 2010. Capacity utilisation is higher than twelve months previously, but lower than the years before that. This means that investment spending is not likely to recover in the short term.

Manufacturing capacity utilisation, second quarter 2010

Dutch utilisation rate relatively high

The capacity utilisation rate in the Dutch manufacturing industry was 4 percent points higher at the beginning of the second quarter than twelve months previously. The improvement was smaller than that in many other countries in Europe, but the rate in the Netherlands had not dropped as sharply as in other countries. 

Compared with other countries in the EU, the capacity utilisation rate is high in Dutch manufacturing. At the beginning of the second quarter 79 percent of the available production capacity was being used. Only in the Czech Republic, Germany, Austria. Luxembourg and Sweden was this percentage higher. The average utilisation rate in Europe was 76 percent, nearly 5 percent points higher than twelve months previously.

Karin van der Ven