Netherlands - Business Confidence

Every month, Statistics Netherlands surveys approximately 1,700 manufacturing companies. The participants of this sample survey are taken from the Dutch Business Register (ABR), thus ensuring coordination with other surveys. The purpose of the business survey is to gather up-to-date information on economic developments for all activities of the manufacturing industry and for the manufacturing industry as a body.

To serve a wider public in addition to the professional market and branch analysts, the Directorate General of Finances and Economic Affairs of the European Commission (EC) has developed a confidence indicator for the manufacturing industry. In the Netherlands, this confidence indicator is called "Producer confidence". It is compiled on the basis of three economic survey variables and provides an instant picture of economic developments in the manufacturing industry.

Since early 1997, Statistics Netherlands has published data on producer confidence in accordance with EC guidelines. The indicator is the equivalent of other indicators of the business sentiment survey and the consumer confidence survey, based on some variables of the Consumer Survey of Statistics Netherlands.

Producer confidence is used alongside other indices to indicate the direction in which manufacturing production is anticipated to develop in the short term. Statistics Netherlands does not produce economic forecasts, the indicator is based solely on evaluations and expectations of manufacturing companies. In general, the development of producer confidence will precede the development of manufacturing production by several months. The basis of producer confidence consists of three components of the economic survey, i.e. how companies evaluate their order positions, their stocks of 'finished products' in the month under review as well as the anticipated economic activity in the next three months.

• Measurement: Balance of opinion
• Adjustment: Not seasonally adjusted (NSA)
• Native frequency: Monthly
• Start date: 1985m1

The producer confidence indicator is composed on the basis of three economic survey variables and provides an instant picture of economic developments in the manufacturing industry. Essentially, the notion of producer confidence consists of three results of the economic survey, i.e. how companies evaluate their order positions, their stocks 'of finished products' in the month under review as well as the anticipated economic activity in the next three months.

Producer confidence is calculated in three steps.

1. Firstly, the three component of producer confidence series are seasonally adjusted.

2. Secondly, the three component indicators, irrespective of the economic situation from the very beginning of the observation, reflect a noticeably pessimistic or optimistic trend. Companies tend to assess their order positions and stocks of 'finished products' too pessimistically. Conversely, they are inclined to overrate the economic activity.

This distortion of reality is compensated for by balancing the component indicators with the average of the balance series in the period 1985-1996.

3. Finally, producer confidence is assessed by computing the arithmetic average of the three revised series.

The series on producer confidence is adjusted once a year. This adjustment is necessary because of changes in seasonal adjustment. The underlying balances of the indicators remain unchanged: these are production forecasts, producer opinions about their order position and stock of finished products.