Netherlands: Manufacturing operating conditions deteriorate at a softer pace in June
July 1, 2020
Operating conditions in the Dutch manufacturing sector continued to deteriorate at the end of the second quarter, with the NEVI Manufacturing Purchasing Managers’ Index (PMI) coming in at 45.2 in June. While the figure was up from May’s 40.5, the print remained entrenched below the neutral 50-threshold signaling an overall decrease in operating conditions compared to the prior month.
The uptick in the headline was nonetheless driven by softer rates of decline in output and new orders, both domestic and foreign and, jobs were once again shed, although the rate of job losses slowed marginally from the prior month. Given weak demand dynamics, outstanding business dropped again and backlogs of work fell at the second quickest rate in over eight years. Purchasing activity was scaled back as a result. Turning to prices, lower raw material and energy costs led to input price deflation and this was passed on to customers, likely in a bid to spur demand amid fierce competition.
Albert Jan Swart, manufacturing sector economist at ABN AMRO, commented:
“There seems to be light at the end of the tunnel. Firms in the Dutch manufacturing sector finally turn cautiously optimistic on production in twelve months. Thanks to the lifting of lockdowns in many European countries, entrepreneurs look at what is ahead in 2021 with more confidence. In the short term, however, the crisis is far from over.”
Author: Jan Lammersen, Economist