The manufacturing sector in the Netherlands showed signs of expansion for the first time in 20 months in April, thanks to improvements in demand, production, and employment. This news was revealed in a survey conducted by S&P Global and ABN AMRO.
The Nevi Manufacturing Purchasing Managers' Index, a key indicator of economic health, rose to 51.3 in April from 49.7 the previous month. Any score above 50 signifies growth in the sector, implying that this was the first time the industry experienced better operating conditions since August 2022.
New orders kept growing for the second month in a row in April, and the rate of growth quickened to the fastest pace in two years. Foreign demand also saw a boost in April.
Responding to this increased demand, manufacturers enhanced their production efforts. In fact, production saw its most significant growth in almost two years.
Despite this growth, firms continued to limit purchasing activity in a bid to deliberately reduce their stocks of inputs. In a positive development, April saw better vendor performance, suggesting that suppliers were facing less capacity pressure.
To support their expansion plans, manufacturers upped their staffing for the third month running.
Simultaneously, the amount of unfinished orders reduced again. The ongoing drop in backlogs highlighted the dual effects of heightened work efforts to clear outstanding orders and quicker delivery times for inputs.
After a year of declining prices, input costs rose in April. These increased input expenses were passed onto consumers as output charges saw a rise for the fourth consecutive month.
April also saw a boost in business sentiment, with firms anticipating improvements in demand and new projects supporting output growth in the forthcoming year. Albert Jan Swart, an economist at ABN AMRO's Manufacturing Sector, stated the company anticipates a gradual increase in economic growth from this quarter. He also predicted a drop in the ten-year interest rate from its current 2.9 percent to 2.1 percent by year-end.
