You're all invited to
the party
You know you didn't
have to come
No rotten apple gonna
spoil my fun
If you don't like what
you see here
Get the funk out
It is hardly a secret, that during the last four years my
stance has mostly been at the bearish side of the balance, with respect to the
Dutch economy. Too often during this period, the economic crisis was declared
finished by well-respected pundits, only for us to see a rebound of it a few
months later.
My point was traditionally that there had not been enough of
the necessary structural changes in the Dutch economy to logically declare a
return to autonomous growth.
Nowadays, however, there is a wide array of improvements
visible in the Dutch economy, at different areas. And although there is neither
a strong impulse from an important economic development (i.e. such as the
emerging of the world wide web or the development of the microprocessor) nor a structural
driver for jobs (i.e. autonomous economic growth, based upon higher
productivity and improved efficiency), it seems that the European quantitative
easing program has done the job, in combination with the weaker Euro.
Buying European stuff is simply much cheaper nowadays
(exports(!)) and the positive impulse of QE(EU) at the European stockmarkets is
unmistakenably. Nevertheless, it is sensible to not forget that this economic revival
is like a Roman Chair Dance: you can continue dancing for as long as the music
plays, but don’t forget to always keep a keen eye upon an empty chair.
In other words, one should consider that this economic
growth is probably the result of quantitative easing and quantitative easing
alone: when the program stops, growth could be gone again.
One of the people who has a happy smile on his face these
days, is the flamboyant chairman of employer’s organization VNO/NCW Hans de
Boer
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| Hans de Boer of VNO-NCW during a broadcast of BNR Newsroom in September, 2013 Picture copyright of: Ernst Labruyère Click to enlarge |
In the past, Hans de Boer was chairman of the steering group
for youth unemployment and he is still very much involved in the subject. And
particularly in the area of youth unemployment great progression has been made of
late.
And for him, in his current role as chairman of the
employers, the economic revival is also very good news. Exports are soaring
again, consumption seems finally on the way back to better results and the
housing prices have shown a rising pattern for almost a year in a row now.
So, it is good news all the way for him. Or isn’t it, after
all?!
De Telegraaf:
Party-time in the
economy! Our country is doing much better than anticipated earlier. While the
Dutch Central Planning Bureau is expecting a general growth figure of 1.7%, the
employers’ organization VNO/NCW is much more optimistical.
Chairman Hans de Boer
is reckoning with a growth rate of at least 2%, which would bring us at the
highest growth level since the economic crisis started in 2008. “Our economy is
really doing much better than anticipated. My members told me that”, according
to De Boer. “I have never been so optimistical about entrepreneurship in our
country, as nowadays”. The improving economy is good news for employment and
consumer confidence. On top of that, domestic spending will further increase.
These days, Hans de Boer certainly got what he wanted,
albeit with a few important snags. Consumption had indeed increased
considerably, but in spite of De Boer’s optimism, the consumer confidence had
dropped (un)expectedly.
The following snippets come from the Dutch Central Bureau of
Statistics:
In February, consumers
spent 2.4% more upon goods and services than one year earlier. This is the
largest increase in four years time, according to the CBS today. Consumers
spend more money on gas, clothing and home furnishing. Consumer confidence
dropped slightly in April, month-on-month. Consumption data have been adjusted
for price changes and changes in the number of purchase days during this period.
In February consumers
spent 4.1% more on durable goods than one year before. They especially spent
more on clothing and home furnishing. Last week, CBS already published data which
showed that fashion shops had higher year-on-year sales, for the first time in
half a year.
In April the
circumstances for consumption by Dutch households have once again improved
month-on-month. The confidence of entrepreneurs in the manufacturing industry,
with respect to future employment, has improved considerably. Stock ratings and
housing prices have increased year-on-year. However, consumers were slightly
more negative regarding future employment.
The mood among
consumers slightly deteriorated in April 2015, in comparison with March. The
consumer confidence dropped by 2 points to 0, which means that there are equal
numbers of optimists and pessimists among the consumers. This slight
deterioration is mainly caused by a dropping confidence of consumers in the Dutch
economy and a declining willingness to purchase goods.
 |
| Domestic consumption by households, adjusted for shopping days Data and chart courtesy of: www.cbs.nl Click to enlarge |
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| Consumer confidence, seasonally adjusted Data and chart courtesy of: www.cbs.nl Click to enlarge |
Oops, the last paragraph could be a small blow for De Boer’s
good news story, although it can’t come unexpected.
There are still considerable reorganizations going on in the
financial and construction industry – especially among banks and insurance
companies, as well as construction companies not involved in residential real
estate – and a number of companies is definitely busy to dismiss its workers
from temporary labour agencies befory July 1st of this year, in order to
prevent themselves from the
obligation to pay transition payments.
Yet, there has been quite a lot of other good news, of late.
See the following snippets from a number of older publications from the CBS:
The Dutch Central
Bureau of Statistics announced today that the volume of exports of goods was
6.6% larger in February 2015 than twelve months previously. The growth was
somewhat lower than in January. Exports of transport equipment, natural gas,
and oil products grew by most in February. Exports of Dutch products as well as
re-exports were higher than in February last year. The volume of imports was
0.5% larger in February than twelve months previously. In January, imports rose
by 1.3%.
According to the
Central Bureau of Statistics’ Exports Radar, circumstances for Dutch exports
improved in April 2015 from March. The real effective exchange rates on an
annual basis were far more favourable than in the previous month. Producer
confidence in the eurozone and Germany was less negative than in the previous
month.
 |
| Exports of goods (volume adjusted for working days) Data and chart courtesy of: www.cbs.nl Click to enlarge |
Exports have profited dramatically from the depreciation of
the Euro, as a consequence of QE(EU). As long as the wages remain stable in The
Netherlands, the export to non-Euro countries within the EU as well as outside
the continent will remain soaring. However, this “success” has little to do
with successful policies of Cabinet Mark Rutte II, as Hans de Boer stated in
another article, and everything with quantitative easing Mario (Draghi)-style.
The Central Bureau of
Statistics announced today that retail turnover was 1.2% up in February 2015
from the same month last year. Retail sales (volume) continue to grow, by 3% in
February. Retail prices fell by 1.8%. Turnover and sales generated by food,
drinks and tobacco shops and non-food shops improved in February.
Within the non-food
sector, chemist shops and home furnishing shops reported higher turnover
figures. This was also the case in the preceding months. For the first time in
six months, clothing shops also achieved better results. Consumer electronics
shops recorded a 3% turnover loss, versus a turnover growth by nearly 4% in
January. Turnover results realised by household appliances shops, DIY shops and
textile supermarkets were again below the level of the preceding month in
February.
Supermarkets almost
entirely accounted for the turnover and volume growth in February. Turnover
generated by specialist shops hardly improved relative to one year previously. Mail-order firms and
online shops saw turnover rise by more than 12% compared to February last year.
The growth rate was higher than in January.
 |
| Turnover, price and volume developments in February 2015 Data and chart courtesy of: www.cbs.nl Click to enlarge |
This information also paints a quite schizophrenical picture
of the Dutch consumption. While especially clothing and home furnishing shops,
as well as supermarkets show a very favourable picture for the first time in a
long period, the consumer electronics shops and stores for household appliances
and DIY articles present less favourable data. In my humble opinion, it seems
yet much too early to declare the crisis to be defenitely finished, based upon
these consumption data alone.
On top of that, there is still a firm hint of deflation in the price development, as you can see in the aforementioned chart. Although many pundits want you to believe that this is caused by the development of oil prices alone and nothing else, please don't believe them.
The Central Bureau of
Statistics announced today that the number of people who found jobs has grown
by an average of 6,000 a month during the past three months. Most people who
found work are young. The labour force remained fairly stable during that
period. As a result, the number of unemployed was reduced by an average of 6,000
a month.
 |
| Total and employed labour force Data and chart courtesy of: www.cbs.nl Click to enlarge |
Figures provided by
the Employee Insurance Agency indicate that last month, 443,000 unemployment
benefits were paid, i.e. 12,000 down from February.
Last month, 626,000
people were unemployed. They were available for the labour market and looking
for work, but they could not find work; 7.0% in the labour force were
unemployed, versus 7.2% three months ago. The rest of the 15 to 74-year-old
population (3.8 million individuals) did not have work and were not looking for
jobs, the so-called non-labour force.
More young people
found work. In the first three months of this year, the number of employed 15
to 24-year-olds rose by an average of 10,000 a month. The number of young
people working twelve hours a week or more has also increased. Over the past
three months, the unemployment rate among young people was reduced from 11.8 to
10.8%. The Employee Insurance Agency reports that the number of unemployment
benefits also declined, in particular among 15 to 24-year-olds.
 |
| Labour force by age: average monthly change over three months Data and chart courtesy of: www.cbs.nl Click to enlarge |
Nearly two in three
working young have flexible employment contracts (see second graph). The ratio
is much higher than among over-25s. Nearly three in ten young people have
permanent employment contracts and fixed working hours, as against nearly seven
in ten working 25 to 74-year-olds.
 |
| Position in the working environment by age Data and chart courtesy of: www.cbs.nl Click to enlarge |
There were two very important snags in this CBS good
news-article about the labour market, which it definitely is in my humble
opinion. First, the employment among 45+ workers did not grow so hard as the
employment among youngsters. While I am very happy that so many more youngsters
find a job these days, the age group of 45+ is still extremely important for domestic
consumption.
This is caused by the fact that this group has the highest
salary and consequently the most spending money in general, but also has the
highest expenses, due to generally higher consumption, higher spendings on food,
beverage and hospitality, growing and studying children, expensive family
holidays, as well as different labour circumstances (a higher rate of commuter
traffic).
Therefore this statement upon the diminishing unemployment is
not such good news as it seems initially.
The second snag is the excessive number of temporary and
flexible contracts among youngsters. Only about 3 in 10 youngsters have a fixed
contract these days and it is not plausible that this number will rise very
soon. The flex and temporary labour contracts
of the vast majority of youngsters mean that they can be fired very easily,
when the economy or the relative position of their employer requires that. This
is not a firm base for durable economic growth.
Summarizing, I fully understand where the positive feelings
of Hans de Boer come from and I agree with him that there are some very
positive signals indeed. Yet, I am not so optimistical about the Dutch economy
as he is. There are simply too many snags in the CBS data from the last few
weeks.
As I told before on a few occasions, there is neither a
strong impulse from an important economic or scientific development nor a structural
driver for jobs in the economy. The current answer to all questions seems to be
quantitative easing, Mario style.
Therefore my advice to Hans de Boer is: enjoy the dance
while the music plays, but always prepare to grab a chair when it stops.
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