Netherlands: Manufacturing operating conditions improve at the strongest clip in over two years in November
January 4, 2021
Manufacturing conditions in the Netherlands improved at a much sharper pace at the close of 2020, with the NEVI Manufacturing Purchasing Managers’ Index (PMI) rising to 58.2 in December from 54.4 in November. December’s print marked the best result since September 2018. Moreover, the index moved further above the neutral 50-threshold that separates an overall increase from decrease compared to the prior month.
The surge in December was driven by a faster rise in output and a near three-year strong increase in new order growth, driving employment growth. Demand dynamics improved both at home and abroad, with new export orders growing at the strongest rate since early 2018. Furthermore, producers increased their purchasing activity, but greater demand for inputs and stock shortages as well as Covid-19-related delays led to the strongest lengthening of delivery times since April. Turning to prices, input prices rose for the fifth month running due to higher transport costs and additional Covid-19 related expenses. This was passed on to customers as output prices also rose. Lastly, confidence regarding output in the year ahead remained robust due to improved client demand, positive vaccination news and hopes of a strong economic recovery.
Commenting on the result, Albert Jan Swart, manufacturing sector economist at ABN AMRO, noted:
"Although the Covid-19 pandemic is not over yet, the Dutch manufacturing sector posts a strong recovery. […] Another reason why new export orders are rising might be that China’s manufacturing sector is showing strong growth, leading to increased imports from for example Germany, the Netherlands’ largest trading partner.”