Netherlands: Manufacturing operating conditions continue to deteriorate in May
Business conditions in the Dutch manufacturing sector deteriorated again in May, with the NEVI Manufacturing Purchasing Managers’ Index (PMI) dropping from 41.3 in April to 40.5. The print marked the lowest result since the height of the global financial crisis. The index thus moved further below the neutral 50-theshold to signal an overall decrease compared to the prior month.
The headline deterioration was driven by further marked falls in output and new orders, leading to a reduction in employment, with jobs shed at the second-quickest pace in over a decade. Output and new orders remained hampered by weak demand dynamics due to the global pandemic. As a consequence, backlogs of work were reduced as firms worked through outstanding business, while purchasing activity eased. Turning to prices, input costs fell due to lower prices for raw materials and oil, while output prices moderated in a bid to spur demand.
Albert Jan Swart, manufacturing sector economist at ABN AMRO, commented: “Given the fact that order backlogs have depleted further and the number of new orders keeps falling, it is not clear whether the Dutch manufacturing sector has reached the bottom. […] Some companies […] will probably benefit from the easing of ‘lockdowns’, both domestically and abroad. However, demand for investment goods in particular is expected to remain sluggish in the short term.”