Business conditions in the Dutch manufacturing sector remained weak in May

The Nevi PMI® for the Dutch manufacturing sector is a composite indicator that summarises the state of the sector in a single figure. It is based on indicators for new orders, production volumes, employment, delivery times and stocks of purchased materials.

The headline index fell from 49.2 in April to 49.0 in May, indicating a slightly stronger — though still limited — deterioration in business conditions. Of the five PMI components, only production volumes made a positive contribution to the headline figure.

Total new orders declined again midway through the second quarter — the tenth decrease in the past eleven months. Panel members reported that their customers remained cautious about placing orders in the current economic climate. However, the decline was minimal and similar to that seen in April. Foreign sales also fell slightly.

Dutch manufacturers increased their production volumes again in May, partly due to new projects and efforts to clear backlogs. This latest rise in output was modest and driven mainly by growth in the consumer‑goods and investment‑goods subsectors.

Because production outpaced the inflow of new orders, companies were once again able to reduce their backlogs in May. This decrease was modest and comparable to April. The continued decline in outstanding or unfinished work — now ongoing for more than two years — prompted companies to reduce staffing levels once more.

The decline in employment was sharp and the largest since December 2023. There were indications that staffing levels were being reduced through reorganisations and cost‑cutting measures.

Purchasing policies also remained cautious in May. This was the twelfth consecutive month in which the volume of materials purchased fell, and this latest decline was attributed to weak sales. The reduction in purchasing activity was substantial, although slightly less pronounced than in April. At the same time, stocks of materials decreased as companies preferred to keep inventories low. The decline in stocks of purchased materials was significant, but the smallest since August last year.

Weaker demand for materials helped ease pressure on suppliers, and average delivery times were shorter than in April. This modest improvement in supplier performance was the first in twelve months and contrasted with the historical trend of lengthening delivery times (42.8).

Meanwhile, cost pressures continued to ease in May. Input price inflation fell for the third consecutive month and reached its lowest level of 2025 so far. Respondents reported that cost inflation was mainly driven by labour costs and prices for energy, raw materials and food. Dutch manufacturers were also less aggressive in setting their selling prices, and selling‑price inflation was the lowest seen this year.

Dutch manufacturers remained optimistic about an increase in production volumes over the next twelve months. The positive growth outlook was partly attributed to the expected inflow of new customers and orders. Optimism was higher than in the previous month, but remained moderate by historical standards.