Dutch industry will continue to suffer from higher interest rates. Last month, the number of new orders to Dutch manufacturing companies fell for the ninth consecutive month, reports the Dutch Association for Purchasing Management (NEVI).
In fact, the decline was the largest since November of last year. This is due to the weaker demand due to the sharp increase in interest rates, which also affects the prices in the sector. For example, product selling prices generally still increased, but by the lowest percentage in 2.5 years. In April, selling prices increased for the 33rd consecutive month. Input prices decreased for the second consecutive month. The decline was the largest since April 2016, excluding the pandemic. This is due to weaker demand, especially from semi-finished products producers. They have lowered their selling prices again.
“It is entirely possible that demand will remain weak in the foreseeable future due to high interest rates,” says Albert Jan Swart, industrial sector economist at ABN AMRO. “However, demand for industrial products may pick up slightly once companies finally finish destocking.” According to Nevi, manufacturing companies are still positive in their outlook for the next twelve months.
Shorter delivery times
On the other hand, the decline in the number of orders also leads to shorter delivery times. The drop in April is the strongest for more than twenty years that Nevi has been conducting this study. Respondents indicated that low demand has eased pressure on supply chains.
Each month, the Nevi measures the conditions for companies. The Nevi’s so-called Purchasing Managers’ Index fell to 44.9 last month, from 46.4 in March. A level of 50 or more indicates growth, below that contraction.
Source: BNR
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