A river under the bridge in the Netherlands

Netherlands PMI August 2021

Netherlands: PMI falls in August but conditions continue to improve

The NEVI manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, dropped to 65.8 in August from 67.4 in July. Nonetheless, the index remained handsomely above the neutral 50-threshold that separates improvement from a deterioration in business operating conditions among Dutch goods-producers.

The downtick came on the back of the slowest increase in six months in new orders, output and exports, although the expansion remained healthy due to firming demand in the month. Supply-side issues, moreover, weighed on production, with input delivery times lengthened due to insufficient transport capacity and raw material shortages. Employment levels rose at the fourth-strongest rate in record in the month as firms attempted to keep up pace with demand, while firms also stepped up purchasing activity to safeguard inventories in the event of future supply disruptions. Rising demand for materials coupled with shortages drove a notable uptick in input costs; greater input prices were passed on to customers, with output prices continuing to rise sharply. Lastly, firms were optimistic in August, with sentiment logging a three-month high amid higher output prospects.

David Kemps, sector banker manufacturing at ABN AMRO, commented:

“Output was affected by material shortages and the fact that capacity utilisation of many Dutch plants has reached its maximum. The last issue is hard to resolve as the delivery times for new production equipment are very long and the shortage of qualified technical staff makes implementing multiple production shifts difficult.”

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