Netherlands: Operating conditions improve at a six-year soft pace in June
The Dutch manufacturing sector closed the second quarter on a weak footing, with the NEVI and IHS Markit manufacturing Purchasing Managers’ Index (PMI) dropping to a six-year low of 50.7 in June from 52.2 in May. While remaining north of the neutral 50-point mark that separates expansion from contraction in the sector, the index fell significantly below the long-trend of 52.7. Moreover, the index averaged noticeably below the first quarter’s average in the April–June period, suggesting a moderation in economic growth in the second quarter.
The latest downtick came on the heels of the first decline in new orders in six years, which drove weaker output and employment growth. The drop in new orders was partially affected by weak demand in Germany, the United States and the United Kingdom according to anecdotal evidence. Moreover, backlogs of work were reduced at a quick pace and chiefly supported output growth. While purchasing activity fell for the first time in three years, stocks of finished goods still rose owing to weak demand dynamics. More positively, output expectations over the next 12 months improved, and input price inflation softened to a near-three-year low; however, output price inflation continues to rise steadily.
Commenting on the June PMI data, Trevor Balchin, director at IHS Markit, stated that “other survey indicators suggest that the PMI may dip below 50.0 soon as the current record run of output growth is threatened. […] The only positives from the latest survey were a further moderation in input price inflation and stronger 12-month output expectations.”