Netherlands: Manufacturing conditions improve at the softest clip in nearly two years in October
November 1, 2018
The manufacturing Purchasing Managers’ Index (PMI), produced by NEVI and IHS Markit, moderated from 59.8 in September to 57.1 in October. The result marked the lowest reading since January 2017, but the index nonetheless remained above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for over five years.
The drop in the headline reading came on the softest pace of new orders growth in over two years, while export orders grew at the weakest pace in two years. Moreover, output and employment also grew less quickly. Suppliers’ delivery times continued to lengthen, albeit at a slower pace.
Inflationary pressures remained intense despite input price inflation coming down from the previous month’s eight-month high. Input prices rose chiefly on higher prices for oil-related items, plastics and cardboard. Subsequently, output price inflation remained elevated. Although business sentiment remained positive, output expectations fell to an over two-year low.
Commenting on the October result, Trevor Balchin, Director at IHS Markit, stated that “the recent slowdown should […] be viewed in the context of a sustained period of record high growth rates in late-2017 and early-2018. Furthermore, the Dutch manufacturing sector continues to expand at a faster rate than both Germany [and] the eurozone as a whole”.
Netherlands Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 3.4% in 2019, which is up 0.1 percentage points from last month’s forecast. For 2020, the panel expects fixed investment to increase 2.1%.
Author: Jan Lammersen, Economist