Netherlands: PMI continues to moderate at the start of the third quarter
The NEVI manufacturing Purchasing Mangers’ Index (PMI), co-produced with IHS Markit, eased from 60.1 in June to 58.0 in July. The result marked an over one-year low and the largest one-month drop in the headline reading in nearly three years. Nevertheless, the PMI remained above both the crucial 50-point mark that separates expansion from contraction in the Dutch manufacturing sector, where it has been since July 2013, and the long-run average of 52.6.
The print was affected by softening growth in output and new orders. Production growth eased from recent highs but remained resilient nonetheless: Output has increased continuously for over five years, which is the longest sequence in the history of the survey. Although new orders increased for the 29th consecutive month, the pace of growth slowed to a near two-year low. Meanwhile, new export orders also increased at a slower pace in July. Despite moderating demand dynamics, backlogs of work increased.
Input price inflation rose in July on higher raw material prices, partially linked to higher oil prices. Increased input prices were passed on to consumers, with output prices rising sharply. Looking ahead, sentiment among firms remained positive due to the outlook on planned investment, new products and demand levels.
Trevor Balchin, director at IHS Markit, commented that “the Dutch manufacturing sector […] remains at a historically high level and is still well above the eurozone aggregate […]. The latest survey also revealed growing cost pressures and continued capacity constraints, linked to shortages of both primary materials and electronic components.”