An SMS from Ernst (18): Short Messages Service

The next SMS of this month contains some important data from the Dutch Central Bureau of Statistics, combined with data from the Dutch Bureau of Credit Registration (www.bkr.nl) in The Netherlands.

And the data looks grim, without any exception. This is totally in line with my statement that the Dutch economy is already in a recession (or better: still not out of the 2009 depression), even when this is not officially established by the powers-that-be and some financial pundits.

Dutch consumer confidence (CBS)

The mood among Dutch consumers weakened further in October. Consumers are obviously more negative about the future. They have never been so negative about their own financial situation in the next twelve months as in October. The consumer confidence indicator fell by 3 points to – 33. 

Consumer confidence in the economic climate had already deteriorated over the past months. This component indicator fell by another 5 points to – 58 in October. Dutch consumers were much more negative about the economic situation over the next twelve months. Their opinions on the economic situation over the past twelve months also deteriorated. 

Willingness to buy also deteriorated in October. This component indicator fell by 3 points to – 17. Consumers have never been so pessimistic about their own financial situation in the twelve months to come. This indicator dropped 8 points to – 19, the lowest level in 25 years. Their opinions about their own financial situation in the past twelve months were also more negative, although consumers thought the time to buy expensive items was slightly less unfavourable. 

Dutch consumers are also pessimistic about the labour market. In October, 65 percent expected unemployment to rise in the next twelve months, whereas only 7 percent expected a reduction. Over the past eighteen months, consumers have not been so explicit with respect to future unemployment. Recent unemployment figures show a substantial increase over the last months.

Consumer confidence in The Netherlands: source www.cbs.nl

  

It seems that finally with the Dutch people the thought is starting to sink in, that until now we have had it very easy with the worst economic crisis since 1929. People now feel that much harder times might be awaiting them and express this in their statements and in their economic behavior. These negative feelings are further fueled by the indecisiveness and egocentric and destructive behavior of the European leaders.

Unemployment further up (CBS) 

The Dutch unemployment figures that are presented by the CBS, although still among the lowest in Europe, also show a rapidly rising trend:

• Rapid growth unemployment in third quarter 2011
• Increase among both genders 
• Number of job seekers registered at UWV stable 
• Fewer WW benefits in September

According to the most recent figures released by Statistics Netherlands, seasonally adjusted unemployment increased by 17.000 in September 2011 to 438.000, i.e. 5.6 percent of the labour force. 

Figures published by the Institute for Implementation of Employees’ Insurances (UWV) indicate that the number of job seekers remained fairly stable in September 2011 relative to the preceding month and that fewer unemployment (WW) benefits were granted. 

Unemployment increased for the third month in a row in September. The average monthly unemployment growth in the third quarter of this year was approximately 15.000. Over the first six months of this year, unemployment remained stable. 

Unemployment growth was about the same for both genders in September. This also applies to July and August, whereas over the first six months of 2011, female unemployment had declined. 

The number of job seekers filed in the UWV database was 455.000 in September, roughly the same amount as in August. The number of job seekers under the age of 25 grew for the second consecutive month, but is still 10 percent below the level of one year previously. The number of job seekers in technical occupations has steadily declined throughout the entire year. 

The number of current WW benefits was reduced by 1.7 percent to 252.000 in September. More than 36.000 new benefits were granted and nearly 41.000 benefits were terminated. The number of benefits terminated due to resumption of work increased notably, an annually recurring phenomenon in September.

Mortgage payment trouble Dutch house owners

The following data is from the Bureau of Credit Registration (www.bkr.nl). This bureau is involved with maintaining the credit registrations for (almost) all kinds of loans and credit in The Netherlands.

Every bank and financial institution is connected with the BKR and almost all companies (including brick-and-mortar and online shops) that are involved in any kind of credit supply, are also connected to it, with an exception for the large phone companies.

Most important activity of the BKR is maintaining a black list of people that have already defaulted or that are seriously in arrears with their loan, consumer credit /credit cards and mortgage downpayments.

If you are registered with a negative note at this Bureau, this means in practice that you can get no loan, credit card, consumer credit or mortgage anywhere in The Netherlands. It is even almost impossible to open a simple bank account. You are expelled from almost any financial services for a period of minimally five years.

Therefore the figures of this bureau should be taken very seriously.

More and more problems with the mortgage payments

The number of people that suffers from problems with the mortgage payments is soaring. In Q3 2011, more than 40,000 households had an arrears of at least three months. This is disclosed in data from the BKR. 

In Q3 2009, there were 32,000 people that were in serious arrears. The increase took place in a fairly stable mortgage market, with a number of 3.8 mln mortgages during the last few years. 

In most cases, a divorce or job loss are the main reasons. Both reasons lead to people that are not able anymore to pay their mortgage payments. 

Probably, these people are not only in arrears at their mortgage supplier, but also at the Dutch Internal Revenue Service, their energy supplier or health care insurance company.

I wrote it many times in my past blogs: in the end something’s got to give in the Dutch housing market. Even in a country with such a high payment moral as The Netherlands. When people can’t pay their mortgage anymore and can’t sell their (much too expensive) house in time, they get in arrears, even when the consequences will be harsh.

Expect many more of these stories in the following months.
Producer confidence manufacturing industry drops back (cbs)

The mood among Dutch manufacturers deteriorated in October. The producer confidence indicator dropped from – 0.5 in September to – 3.2 in October, bringing the indicator at the same level as in August. 

Producer confidence consists of three component indicators: manufacturers’ opinions on their order positions, the expected output over the next three months and opinions on their stocks of finished products. 

Manufacturers were much more pessimistic in October about both their order positions and future output than in September. Their opinions about their stocks also deteriorated, though to a lesser extent. 

For the fourth month in a row, manufacturers expecting employment in their branch to increase in the next three months were outnumbered by those expecting employment to decrease. During this period, the group expecting employment to decline has steadily grown. 

Manufacturers indicated that the value of the orders they received dropped over the last three months. With 100.2, the order position index (orders expressed in months of work) reached the lowest level since July 2010. 

With 80.1 percent, the capacity utilisation rate was marginally lower in October than in July (80.9 percent). One in every four manufacturers considered insufficient demand as an obstacle to production, as against one in every five in the previous quarter. 

Manufacturers evaluating their production capacity as too large marginally outnumbered those evaluating their production capacity as too small. They indicated that their competitive position on the domestic and foreign market improved somewhat in the past three months.

Producer confidence in The Netherlands: source www.cbs.nl

After reading this last snippet (red and bold), I find it intriguing that only a small majority considers their production facilities as being too large. It is my expectation that this number will soar in the coming months: thanks to the the years of exuberant consumption and borrowing (2003-2008) and the Part-time Unemployment Benefit that prevented from a downsizing of production capacity, there should be some serious overcapacity left in the market.

Even in a country like The Netherlands,  where a large share of the total industrial production is exported to other countries, there is enough room for downsizing in the manufacturing industry, the building industry, the banking and (financial) services industry and the agricultural industry. One should remember that there is a great chance that exports will reduce, as all the peripheral countries of the Euro-zone are in financial trouble and these countries are definitely among our biggest customers.

Concerning the agricultural industry: although people have to eat anyway, the type of food they eat might change from expensive meat and vegetables to cheaper ones. This will have its effect on agricultural exports too.

So you can expect more grim figures from the Dutch economy in the not too distant future.