June sees first improvement in manufacturing business conditions in 12 months

The Nevi PMI® for the Dutch manufacturing sector is a composite indicator that summarises the state of the manufacturing sector in a single figure. It is compiled using indicators for new orders, output, employment, delivery times and stocks of purchases. The PMI rose from 49.0 in May to 51.2 in June, moving above the no‑change threshold of 50.0. This signals an improvement in business conditions in the sector, the first in twelve months.

Stronger demand was a key reason for the higher headline figure. The increase in total new orders received was the first since February and the largest in more than a year. Companies frequently reported stronger customer demand from both domestic and foreign markets. New export orders rose for the first time since May 2024.

The increase in sales led to a further modest rise in output in June, extending the current period of growth to four months. Panel members also indicated that larger staffing levels had contributed to the rise in production.

Employment in the manufacturing sector therefore increased for the first time in almost a year, albeit modestly. Some panel members noted that strong

The increased capacity enabled firms to reduce their backlogs once again in June. The decline in the volume of outstanding or unfinished work was the sharpest in three months, although it remained well below the rate of reduction seen at the start of the year.

There were signs of improving demand and a further rise in output. Nevertheless, Dutch manufacturers remained cautious in their purchasing activity, and the volume of inputs bought fell again in June. Companies also reduced their inventories of both raw materials and finished goods, although these declines were smaller than in May.

Despite the continued fall in purchasing activity, firms again reported a deterioration in supplier performance in June. Longer delivery times were generally attributed to geopolitical factors and delays in shipping routes.

As for prices, input cost inflation continued to ease in June, with the smallest rise in purchasing costs in seven months. Some companies linked higher costs to increased food prices.

Following the same trend as input costs, the selling prices charged by Dutch manufacturers rose at a slower pace in June. Output price inflation was even the lowest recorded so far this year.

Finally, business confidence regarding production expectations for the year ahead rose to its highest level since February. This growth outlook was supported by expectations of stronger foreign demand, higher investment, expansion plans and the launch of new products.