Netherlands: PMI hits record-high in March
April 1, 2021
Operating conditions in the manufacturing sector improved at a record-steep pace at the close of the first quarter, with the NEVI Manufacturing Purchasing Managers’ Index (PMI) jumping to 64.7 from 59.6 in February. Moreover, the index moved further above the neutral 50-threshold that separates an overall increase from a decrease compared to the prior month.
The strongest improvement on record came on the back of a rapid upturn in output due to record growth of new orders. New business was boosted by both domestic and foreign demand, with the latter rising at the steepest pace on record. Suppliers’ delivery times, meanwhile, lengthened and further drove the headline reading. Lead times for inputs increased owing to supply constraints and stock shortages amid surging demand, while Covid-19 continued to pose logistical problems. Stocks of finished goods decreased as the rise in demand was in part fulfilled from inventories. Greater demand also saw the strongest rise in employment since January 2019. On the price front, input price inflation hit a one-decade high in March due to greater raw material costs, supplier shortages and increased transportation costs. Higher input prices were partially passed on to customers, with output price inflation rising at the strongest pace in a decade as well. Lastly, confidence regarding the outlook for output in the coming year remained high in March amid expectations that demand conditions will continue to improve.
Albert Jan Swart, manufacturing sector economist at ABN AMRO, commented:
“The PMI scores are based on data that were collected until 23 March 2021. That day, the ultra large container ship Ever Given run aground en route from China to Rotterdam, blocking the Suez Canal and forcing other vessels to sail around the Cape of Good Hope, adding five to six days to the normal journey through the Suez Canal. There is no doubt that the blockage will lead to even longer delivery times and higher input costs in April. Now that ships can pass through the canal again, these will arrive at the same time as many other ships that have sailed around the Cape. This will most likely cause chaos in European ports, which would lead to even more delay. […] The big question is whether firms can continue to increase output during the following months amid further supply chain disruption.“