Netherlands: Improvement in manufacturing sector loses steam in December
The NEVI manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell to 58.7 in December from 60.7 in November. This marked the sixth moderation in the headline print in the last seven months, and the first reading below 60.0 since February. Although the index remained above the neutral 50-threshold separating an overall improvement from a deterioration in business conditions, it signaled the softest improvement since December 2020.
The downtick came on the back of output, new orders and exports growing at the softest paces since late 2020. That said, new orders continued to rise due to the ongoing recovery and expectations of delays and price increases. Growth in employment and backlogs of work also moderated. Meanwhile, in an attempt to protect against future material shortages and price hikes, manufacturers recorded one of the strongest increases on record in input stock. Lastly, price pressures remained severe despite easing to a three-month low.
Albert Jan Swart, manufacturing sector economist at ABN AMRO Bank, added:
“It does seem like supply and demand are becoming more balanced, with inventories of finished goods only declining slightly. However, Omicron has already disrupted supply chains. Countries such as China prefer to be safe rather than sorry and order lockdowns of factories and quarantine measures in container terminals in response to just a small number of infections. Omicron might also lead to more lockdowns in Europe, which might drive consumer spending on goods. Thus, Omicron might lead to more supply chain disruption and an increase of demand for goods, which might make shortages even worse.”