Netherlands: Manufacturing PMI falls to over one-decade low in April
May 4, 2020
Operating conditions in the Dutch manufacturing sector deteriorated markedly at the start of the second quarter owing to the Covid-19 pandemic, with the NEVI Manufacturing Purchasing Managers’ Index (PMI)—produced by IHS Markit—dropping to a near 11-year low of 41.3 in April from 50.5 in March. Consequently, the index moved south of the neutral 50-point mark that indicates an overall decrease compared to the prior month.
With the pandemic and global containment measures continuing to wreak havoc on domestic and foreign demand, output and new orders declined at the strongest pace on record. Consequently, employment fell at the quickest pace since July 2009. Lower new orders enabled goods-producers to reduce backlogs at the fastest rate in eight years. Looking at prices, input prices fell for the first time in five months due to weakened demand and low commodity prices. However, output prices were largely stable.
Commenting on the data, Jan Swart, sector economist manufacturing at ABN AMRO, noted: “Although industrial output plummeted at record speed in April, there are clear signs that more trouble is ahead. […] With new orders both domestically and abroad plummeting to record lows, Dutch manufacturers are bracing for impact. In spite of all the government measures to protect jobs, employment fell at the quickest rate since July 2009. Expecting a prolonged slump in demand, many firms have laid off temporary staff whom had been so painstakingly hired only months ago.”
Author: Jan Lammersen, Economist