Netherlands: Manufacturing PMI falls at over six-year quick pace in December
January 2, 2020
The Dutch manufacturing sector ended the year on a sour note, as operating conditions worsened at the strongest pace in over six-and-a-half years in December: The NEVI Manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell to 48.3 in December from 49.6 in November, remaining below the 50-threshold that separates an overall increase from an overall decrease compared to the prior month.
The contraction was driven by the steepest reduction in output in over a decade as well as a sharp drop in order book volumes. Weakness in new orders was driven by both softer domestic and foreign demand; the latter declined at the strongest pace in more than eight years. This also drove a further drop in backlogs. Consequently, jobs were shed for the first time in over four-and-a-half years while purchasing activity was scaled back. Looking at sectors, operating conditions among consumer goods producers reported a further improvement and defied the overall trend. This suggests that household spending remained robust.
In terms of prices, inflationary pressures returned after two months, although they remained subdued by historical standards. Input prices rose marginally due to pricier raw material costs and supplier shortages. Consequently, output prices also rose marginally.
Author: Jan Lammersen, Economist