Netherlands: Manufacturing operating conditions continue to deteriorate in July albeit at a softer pace
August 3, 2020
Operating conditions in the Dutch manufacturing sector continued deteriorating at the start of the third quarter, with the NEVI Manufacturing Purchasing Managers’ Index (PMI) coming in at 47.9 in July. The figure was, however, up from June’s 45.2 and highlighted that the economy should have passed the trough of the crisis. Nonetheless, the print remained below the neutral 50-threshold signaling an overall decrease in operating conditions compared to the prior month.
The uptick in July came on the back of softer falls in output and new orders. While production continued to decline, the drop was marginal and the smallest since the Covid-19 crisis began. However, despite softer contractions in output and new orders, jobs continued to be shed at a notable pace in the month; subdued demand dynamics drove firms to reduce working hours. Similarly, goods-producers remained cautious regarding buying activity and stocks of purchases, with both dropping again. Turning to prices, deflationary forces persisted: Input prices eased amid falling cost burdens, and output prices were slashed in a bid to attract sales.
Albert Jan Swart, manufacturing sector economist at ABN AMRO, noted: “Businesses are increasingly optimistic about output in twelve months. There seems to be good hope for economic recovery in 2021.”