Waiting for macro figures following high energy prices

Virtually all recently published macroeconomic figures relate to the period prior to the rise in energy prices. That increase is a major shock, and it is unclear what the impact will be on the economy.

The volume of industrial production in our country was 0,7% lower in February than a year earlier. That disappointed me, because purchasing managers have actually been quite optimistic in recent months. The differences between the various sectors are significant. Thanks to our 'chippers', the production volume in machine building was 8,0% higher than a year earlier. Production in the chemical industry was 9,5% lower. The chart below (where the scale of both axes differs) illustrates the contrast nicely.

The engineering sector will undoubtedly continue to benefit from the rapid growth in spending by companies on AI worldwide. The chemical industry, on the other hand, has been taking a beating for quite some time. The most recent figures relate to February, so before the rise in energy prices. It makes you hold your breath. Will the energy-intensive industry take another hit? Perhaps it won't be too bad in the short term. I read stories of production disruptions in Asia, causing some customers to turn to European suppliers. This has to do with the fact that by far the majority of the oil and gas that passes through the Strait of Hormuz goes to Asia.

Incidentally, the situation for the industry in our eastern neighbor is not much better. There, production volume fell by 0,3% in February compared to January and was the same as a year earlier. After a sharp decline in January, orders placed with the German industry recovered only marginally.

Inflation in our country rose from 2,4% in February to 2,7% in March. Actually, that wasn't too bad, as the rise in 'prices at the pump' pushed the inflation figure up by 0,4%. However, the pace of price increases for services dampened inflation somewhat. Furthermore, the details offer few interesting new insights. There are no clear signs yet that the increased energy prices are already having a broader impact on the economy, separate from pump prices. But that will undoubtedly come in the coming months. Naturally, much depends on what happens next with oil and gas prices. It is said that, even if the Strait of Hormuz reopens quickly, they will remain high for a long time. In that case, I assume we will see inflation figures of around 5% later this year. I am curious how that will be received in wage negotiations. Press releases from the employers' organization AWVN are already complaining bitterly about the wage increase.

The Dutch consumer is certainly not showing their best side. The volume of household consumption spending in February was 0,5% lower than a year ago. That was the second consecutive month with a decline. According to the recently published Central Economic Plan by the CPB, purchasing power is expected to rise by 1,4% this year. In that context, a drop in consumption spending is a disappointment. And all of this was before the rise in energy prices.

Elsewhere, too, recent figures mainly relate to the period before the higher energy prices. And so, those figures don't really say much. I will therefore limit myself to a chart that I do not often show: the profits of US non-financial companies, as reported in the national accounts. The vertical line indicates the outbreak of the pandemic in the first quarter of 2020. Stock prices have risen sharply in recent years, except in 2022 when interest rates rose sharply. Stock prices are significantly influenced by corporate profits. The interesting thing about the chart below is that corporate profits increased very strongly after the pandemic. That at least justifies a significant part of the rise in stock prices. The most recent data in the chart relates to the fourth quarter of 2025.

Closing
There is little point in providing extensive commentary on recent macroeconomic figures. The sharply increased energy prices are a shock whose effects are difficult to assess. We will monitor the situation closely over the coming months. In any case, developments in the Dutch manufacturing sector and consumer spending just before the outbreak of hostilities were disappointingly weak.

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.