Netherlands: Manufacturing sector conditions improve at a softer pace in May
The NEVI Manufacturing Purchasing Managers’ Index (PMI), produced by S&P Global, eased to 57.8 in May from 59.9 in April. However, the index remained comfortably above the neutral 50-threshold that separates improving from deteriorating business conditions compared to the prior month.
The headline moderation was driven by the weakest output growth in 18 months, with anecdotal evidence pointing to material and staff shortages as limiting factors. The Dutch labor market remained extremely tight, and firms highlighted the lack of skilled labor as a barrier to increasing headcounts. Meanwhile, new orders increased at the softest rate in 19 months as the war in Ukraine, high inflation and lingering pandemic concerns prevented customers from placing orders. Export sales similarly rose at a nearly two-year soft pace, although demand from the United Kingdom and Scandinavian markets firmed. Backlogs of work rose despite cooling demand, as production constraints were the most severe in six months. Looking at prices, input price inflation eased to a three-month low but remained intense. Higher costs were passed on to customers, with output price inflation rising at the second-strongest rate on record.