It is again time for my SMS: short messages service. There was really a tidal wave of economic news in The Netherlands and to be frank: most of it was bad.
Only the most optimistic Dutch Prime Minister or owner of an ICT company can state without blinking ‘that the economic crisis is over and the only way is up’. However, the people that read my blog or other economic blogs (see the list in my profile for good ones) know that this is far from the truth.
Here is my choice of the economic news of the last days
Saab: the wages can’t be paid anymore
The situation around the Swedish, Dutch-owned car manufacturer SAAB is deteriorating at a blistering speed. After the production did stop and hasn’t yet started again, the company comes more and more in dire straits. The Dutch Business News Radio station (www.bnr.nl) reports in a short, but tale-telling message (link in Dutch):
The current inability of SAAB to pay out the monthly wages to its workers, can lead to the Swedish unions filing for bankruptcy for the Swedish car brand. SAAB has presumably one week to set the wage payments straight, before real danger of bankruptcy looms.
The main labor union IF Metall stated on Thursday June 23rd, that it prepares an urgent request for payment. As soon as this claim is received by the car manufacturer, the company has seven days to react and resume wage payments. “When it remains quiet, we will seriously consider filing for bankruptcy”, according to a spokesman of the union.
Saab is part of the Dutch company “Swedish Automobile”
Two months ago, on April 15th , I predicted in my article: Saab: saving Swedish airplane company…:
· In the current tempo Saab will default within 3 months, unless a miracle happens.· Victor Müller will even have to do his very best to stay out of trouble, as the Swedish government might want to have his head after the default of Saab· Spyker, the Dutch sportscar brand co-founded by Victor Müller will also cease to exist· The €400 mln from the EIB will be vanished to the last cent without a trace.
I think that the first bullet is almost a dead-cert now; well within three months. The other bullets will also be true, I’m afraid. That is not something I pride myself on, but in this case it was so obvious that the company needed nothing less than a miracle to survive. And I’m afraid that miracles don’t happen.
Rising unemployment
Rising unemployment
The Dutch statistics bureau CBS (www.cbs.nl) came with the latest unemployment and job figures:
Unemployment figure up by 8000 in May•Unemployment stays around 400,000•UWV registers fewer job seekers and unemployment benefitsIn May 2011 the seasonally adjusted unemployment rate reached 400,000. This equals 5.1 percent of the labour force. The number of unemployed people increased in May according to the latest figures by Statistics Netherlands.UWV figures show that the number of job seekers as well as the number of unemployment benefits are decreasing.
Unemployment around 400,000The seasonally adjusted unemployment rate increased by 8000 in May 2011. In the last six months the unemployment figure stayed around 400,000.In 2010 unemployment fell almost continuously.The increase in the number of unemployed in May is entirely attributable to women. It is the first time in 2011 that unemployment among women actually increased. The number of unemployed men ceased to fall at the start of the year.
•Employment increased by 34,000 jobs in first quarter from same period in 2010•Employment marginally down relative to fourth quarter 2010•Actual wage increase considerably higher than CAO wage increaseIn the first quarter of 2011, the number of jobs of employees grew by 34,000 relative to the first quarter of 2010, but Statistics Netherlands reports that employment adjusted for seasonal variation declined by 7000 compared to the fourth quarter of 2010.
The recent job growth is mainly found in the sectors health care and business services, but job growth in the care sector (+ 34,000) is lower than in prior quarters. In the sector business services, temp agencies contributed most to employment with 21,000 extra jobs.
Adjusted for seasonal variation, the number of jobs fell by 7,000 (0.1 percent) compared to the fourth quarter of 2010. After three quarters of employment growth, this is the first quarter-on-quarter contraction. Employment dropped in construction, public administration and in culture, recreation and other services. Sustained job growth was recorded in the care sector, though the growth rate slowed down relative to the previous quarters.
The Netherland still has an extremely low unemployment rate, compared to other countries, although there is substantial hidden unemployment in it.
And although the unemployment figures still look fabulous to other people’s eyes, from a Dutch point of view, these figures are therefore not very good.
The unemployment rose especially among women and also the number of jobs decreased since the last quarter, although there was an increase year-over-year.
What is puzzling for me, is that the job rises were in the business services/temp services and healthcare industry: both parts of the labor market where especially women are active. You would expect the women’s unemployment to decline, instead of having it rising. I can’t explain that.
It makes total sense to me that Employment dropped in construction, public administration and in culture, recreation and other services:
It makes total sense to me that Employment dropped in construction, public administration and in culture, recreation and other services:
The construction industry is still a mess with the structural vacation in CRE and the locked-up housing market in The Netherlands.
With the cutbacks in the national and local civil services and the cutbacks in culture subsidies, the decline of the number of jobs in those industries is what you would expect. Recreation is also an industry that is sensitive for the socionomic mood. The consumer confidence declined, according to the CBS. This could be an important factor for the direction that economic growth will take in The Netherlands.
Dutch consumers more pessimistic about future economy
Dutch consumers more pessimistic about future economy
Dutch consumers were far more negative about the economic situation in June than in May, but their willingness to buy improved. Overall, the mood among consumers remained about as negative as in May. The consumer confidence indicator fell 1 point to -11.
Confidence in the economic situation in the next twelve months was dented as the component indicator slumped 10 points. Consumers’ opinions on the economic climate over the past twelve months was also more negative, but to a lesser extent. As a result, the component indicator economic climate dropped 7 points to -16.
The decline in confidence regarding the economic climate was partly offset by an improvement in consumers’ opinions with respect to their own financial situation. Consumers were obviously less negative about their financial situation in the past twelve months than in May.
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| Chart on consumer optimism / source: www.cbs.nl |
With regards to their own financial situation, it makes sense that the Dutch people are more confident. With salaries rising (full text can be found by clicking on the link for the CBS job report) the financial situation of the Dutch people improves. But everybody knows that the ‘elephant in the room’ is the European sovereign crisis. And that won’t go away very soon. That explains the rising pessimism under the Dutch consumers, in spite of their improved financial situation.
Housing prices down again
The news that was as predictable as rain showers during summer in The Netherlands, was about the Dutch housing market. Prices fall and the market remains locked:
Prices of existing owner-occupied houses were on average 1.8 percent lower in May 2011 than in May 2010. According to the price index of existing residential property – a joint publication by Statistics Netherlands and the Land Registry Office – the price drop was just below the one in April, when prices were 2.1 percent down on one year previously.
All types of dwellings were cheaper in May 2011 than in May 2010. Prices of detached houses dropped most (2.2 percent). With 0.9 percent, corner houses showed the smallest price drop.
Prices fell in all provinces, except in Utrecht and Groningen. With 4.4 percent, residential property prices declined most in Friesland. Prices in Utrecht and Groningen were respectively 0.5 and 0.3 percent up on one year previously.
Prices of existing residential property units dropped by 0.3 percent compared with April 2011. The price drop was exactly the same as in the preceding months. Prices have declined almost continually since August 2010.
Nearly 10,000 existing residential property units changed hands in May, approximately as many as in May 2010. Fewer flats were sold, but the number of single-family dwellings sold in May was higher than twelve months previously. Within the last category, the number of detached houses increased most (by nearly 11 percent).
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| Housing prices / source: www.cbs.nl |
Today the Economic bureau of ING Bank published its monthly “Housing news” on the Dutch housing market. Here are the pertinent snips (translated to English):
Trust in housing market declines
The trust of (potential) starters and homeowners in the Dutch housing market declined for the 2nd quarter in a row. In Q2, 2011 the ING Housing index was rated 93, a drop of 5 points compared to Q1. This means there are more bears than bulls among starters and homeowners. The drop of the ING Housing index is caused by the expectance that housing prices will drop and less houses will be sold.
The number of starters that considers this moment as favorable for purchasing a house decreases. Also starters are worried more whether they can afford private housing. In the meantime, 54% is worried about this.
Owners of private housing think it will be less easy to sell their house. Only 27% thinks it will be easy to sell their house, against 36% in Q1.
Once again: The Golden Doughnut
His idea of a medicine was:
- Again increasing the amount of credit that starters can borrow on their mortgage and that brought so many starters into trouble.
- Loosening of the stricter rules for obtaining a mortgage by the Dutch banks and the Authority Financial Markets.
- In general: back to 2007 when the sun was shining and everybody was happy on the housing market and housing prices were increasing for eternity.
- And of course he doesn’t want to do anything about the Mortgage Interest Deduction (MID)
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| The Golden Doughnut |
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