Netherlands: Conditions in Dutch manufacturing sector expand at near-three-year low pace in March
The Dutch manufacturing sector continued to lose steam at the close of the first quarter, as operating conditions expand at a 33-month low with the manufacturing Purchasing Managers’ Index (PMI) dropping to 52.5 in March from 52.7 in February. However, the index, a co-production of NEVI and IHS Markit, remained above the neutral 50-point mark separating expansion from contraction in the sector.
The small drop in the headline figure was driven by the softest increase in overall new orders in more than three years, while the pace of job creation also eased. The near-stagnation in incoming new orders likely reflected tougher domestic demand dynamics because new export orders rebounded in the month. In terms of subsectors, the intermediate goods sector suffered from a stronger decline in new business than in February. Output growth, meanwhile, picked up slightly compared to the prior month owing to stronger production among consumer goods producers. Likely linked to softer growth in new orders, the pace at which payrolls increased at the weakest rate since June 2016. Simultaneously, purchasing activity kept pace in the month as firms are preparing for the U.K.’s exit from the EU by building up safety stocks. In terms of prices, input price inflation eased in March and resulted in softer output price inflation.
Looking forward, output expectations for the year ahead weakened to the lowest level since November 2015 owing to softer domestic and global economic growth expectations. Trevor Balchin, director at IHS Markit, noted, however, that “the Netherlands continues to outperform the eurozone as a whole.”