New orders, production and employment are increasing at a slower pace. Purchasing and output prices are rising rapidly. December's Nevi PMI was 58.7. This marks the sixth decline in seven months and the smallest improvement since December 2020.
The Nevi Purchasing Managers' Index (Nevi PMI) is a composite index. This index is designed to provide an overall picture of economic activity across industries. A score below 50.0 indicates a decline in industrial activity. If the Nevi PMI has a score above the critical point of 50.0, it indicates a growing economy. A score of 50.0 indicates no change. The larger the deviation from 50.0, the greater the degree of change in the index. The Nevi PMI is compiled from monthly questionnaires completed by around 350 purchasing managers from the Netherlands.
Increase in production
Production increased for the 17th month in a row, albeit this month to the smallest extent since November 2020. Although orders rose sharply, there was another leveling off. The same was the case for export orders with the smallest increase in 13 months.
Material stocks
The increase in backlogs was the smallest since January and employment growth was the smallest since March. Although the increase in purchasing was one of the smallest in 2021, material inventories rose sharply. Delivery times were again considerably longer.
Purchasing price inflation
Purchasing price inflation was the lowest in three months but remained robust. The same was true for selling price increases. Expectations for future production volumes remained very positive.
Industry sees energy and materials getting even more expensive
"Materials, energy and transport are becoming more expensive and many buyers have been hoarding materials due to shortages and long delivery times, which is now leading to a rapid rise in stocks of purchased materials," said Albert Jan Swart, industry sector economist at Abn Amro in his reaction to the Nevi PMI. "Rates for gas and electricity also ticked up new records. This may lead to higher costs for many entrepreneurs. Supply chains are likely to be disrupted again by the omikron variance. Entrepreneurs are therefore expected to have to reckon with long delivery times in the coming months as well."
Rising production volume
The production volume in Dutch manufacturing increased in December for the seventeenth consecutive month. This was attributed by companies to a number of things. These included a higher number of new orders, new product launches and the ongoing market recovery. However, this increase was smaller than the previous month for the sixth time in seven months. It reached its lowest level since November 2020.
New export orders
Foreign demand for goods produced in the Netherlands rose again in December. This was partly due to demand from Asia, the US, the UK and Scandinavia. The number of new export orders has been rising since August 2020. However, this was the smallest increase in 13 months.
Stock of purchased materials
Manufacturing companies increased their stocks of materials again in December, the fourteenth in a row. This increase was also the largest since August and the third largest since the start of this survey.
Image: Pixabay by Gerd Altmann
