Netherlands: PMI hits new record-high in May
The NEVI manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, continued to reach new record-heights, with the index rising to 69.4 in May from 67.2 in April. Consequently, the index moved further north of the neutral 50-threshold that separates optimism from pessimism among Dutch goods-producers.
The improvement in business conditions reflected record strong growth in output, new orders and exports. Firming client confidence, likely linked to the gradual lifting of restrictive measures and more optimist outlook on the economy as a result, boosted output amid surging sales. A similar narrative unfolded regarding external demand. To keep up with increased output requirements, manufacturers scaled up their buying activity and onboarded additional staff. Greater purchasing activity was also driven by material shortages and delivery delays; firms attempted to shore up inventory levels. Looking at prices, longer delivery times, higher transport fees and pricier raw materials pushed up input prices at the steepest pace on record. Output prices were raised as a consequence.
Albert Jan Swart, manufacturing sector economist at ABN AMRO, commented:
“Industrial output keeps growing in spite of record suppliers’ delivery times and shortages of a wide range of materials. Moreover, some material shortages might impact entire supply chains. […] We believe some firms might have to deal with shortages for the rest of the year, particularly car manufacturing. Still, we think the manufacturing sector will show solid growth overall. Many firms are hiring additional staff, another sign of optimism about the future output. “