Things are still looking rosy for Dutch manufacturing. July, for instance, saw the biggest increase in employment since April 2011. This is evident from the recently published NEVI PMI®.
The NEVI Purchasing Managers' Index (PMI®) is a composite index designed to provide an overall picture of economic activity across industries. A score of the PMI below 50.0 indicates decline in industrial activity, a score above the critical point of 50.0 indicates a growing economy. In July, the NEVI PMI grew from 58.6 to 58.9. That is the highest figure since April 2011. The index is compiled on the basis of questionnaires completed by purchasing managers. They provide more information on, for instance, export orders and new orders.
Increase in production
In the month of July, production increased in several areas: more was manufactured in consumer goods, semi-finished goods and capital goods. It is one of the biggest increases in the past 3.5 years, although production was even higher in June. New orders showed the same picture: a sharp increase, but less than in the previous survey period. Export orders again did well, rising for the 13th month in a row.
The index further shows that the amount of unfinished or outstanding work fell for the second time in three months, although it is a minute drop. In particular, the deployment of additional staff capacity meant that there was not much overdue work in July.
Inventories of finished goods also declined, for the third month in a row. This was mainly due to the high demand for products; as a result, much was sold directly from stock. On the other hand, stocks of purchased materials increased for the 11th month in a row.
Rising demand
Prof Arjan van Weele, NEVI Professor of Purchasing Management at TU Eindhoven, explains the latest NEVI PMI results as follows: "On the one hand, the cause lies in the competitive and innovative strength of our industrial companies. But largely also in the low raw material prices. In an improving economy, demand for raw materials increases. Over time, rising demand translates into rising raw material prices. That is not the case now. On the contrary: prices of oil, plastics and steel remain the same or even fall. This allows selling price increases to be limited, which results in demand for finished products not being discouraged. However, it is important to secure the supply of raw materials and components, with shortages occurring here and there and suppliers struggling to deliver ordered products. This is reflected, among other things, in the further deteriorating delivery times index (from 35.9 in June to 34.4 in July)."
Van Weele is also very pleased with the Netherlands' position compared to other European countries. "We are doing better than average, given Eurozone scores of 56.8 in May and 55.7 in June. The industry is in good shape at the moment and will remain so in the coming months. Reason why I maintain my report grade at 8.1."
CBS
CBS also presented various figures on Dutch manufacturing at the end of July. These showed, among other things, that selling prices in June were 3 per cent more expensive than in June 2016. Products from the basic metal industry were almost 13 per cent more expensive than a year earlier. Prices of products from the food, metal products, automotive and rubber and plastics industries were also higher than a year earlier. This is partly related to the price development of agricultural raw materials and metals, according to CBS. In contrast, prices in the machinery industry were again lower than a year earlier. The agency also announced that producer confidence fell slightly in July: from 7.2 to 6.6. In particular, they are less positive about their expected output.
By: Kelly Bakker
Source: NEVI/CBS.
