“There are very specific reasons why the manufacturing industry is having a tough time,” says Arnoud Boot of BNR Business. Today, the Dutch Association of Purchasing Managers (NEVI) reported that trading conditions in Dutch industry deteriorated sharply in June as demand weakened further. According to the organization, this is the biggest deterioration in conditions in more than three years.
Boot cites several reasons for this, including “the great demand immediately after the corona crisis”. Housing projects that are on hold and shortages of building materials play a part, he says.
Higher interest rates also have consequences, especially in the manufacturing industry. You see investments are declining.’ And that makes sense, says Boot, ‘because demand has dropped and inventories are running low. When demand drops, people want to carry on with low inventories. So it makes sense for the industry to step back,” he says.
‘a blessing’
According to Boot it is about ‘adapting’ to the sector. As an example, he cites “shutting down construction projects, for example through nitrogen measures or making it unattractive to undertake new construction projects.” ‘Let’s think of the measures for the real estate market introduced by Minister De Jonge, which are causing more problems for the sector. These are painful adjustments that are needed.’
At the same time, according to Boot, we have to place that in the broader context of the economy, and so a slight decline in employment is actually the first decline in three years. And according to Boot this is “a blessing”.
This will ease the pressure and hopefully ease the pressure on inflation as well. This is ultimately why the manufacturing industry is getting tougher. As we need to keep raising interest rates to slow the economy and keep inflation in check, the manufacturing industry is struggling.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
