With a seventh consecutive deterioration in business conditions, the Dutch manufacturing sector continued to contract in January.
In January, there was a clear increase in both input and output price inflation. The rise in selling prices was even the largest in four years, as companies sought to pass higher cost pressures on to their customers.
The outlook for future output was also more positive in January. This optimism rose to a level above the long‑term average.
The Nevi PMI® for the Dutch manufacturing sector is a composite indicator that summarises the state of the industry in a single figure. It is based on five underlying components: new orders, output, employment, supplier delivery times and stocks of purchases.
The headline PMI slipped slightly from 48.6 in December to 48.4 in January, signalling a marked deterioration in business conditions across the sector. Four of the five PMI components weighed negatively on the final figure, although only marginally. Stocks of purchases were the sole exception, showing a smaller decline.
Panel members reported that subdued demand and customer uncertainty negatively affected the number of new orders in January. This latest drop in sales was moderate and slightly larger than in December. A sharper fall in new export orders also put pressure on total incoming new business. Some firms noted that price competition from foreign producers was proving challenging.
In response to the weaker inflow of new orders, Dutch manufacturers continued to reduce their production volumes at the start of 2025. The ongoing decline in new business eased pressure on capacity, leading to another reduction in backlogs of work. With this latest decrease, the current period of contraction has now reached exactly two years. This, in turn, contributed to further job losses among Dutch producers, with panel members frequently reporting a reduction in temporary staff.
Lower purchasing requirements resulted in a further decline in buying activity in January. Although the decrease was substantial, it was the smallest in five months. Manufacturers used this opportunity to streamline their inventories of materials. The reduction in stocks was the smallest in three months, yet still above the long‑term survey average. Supplier delivery times lengthened again, reportedly due to shortages of raw materials and labour at vendors.
However, the deterioration in supplier performance remained modest and well below the historical average.
Supply chain pressures were clearly visible in the latest data on average input prices. Cost inflation rose to its highest level since August of last year and was significant. According to respondents, the latest increase was driven by higher raw material, wage and transport costs. The heightened cost pressures prompted Dutch manufacturers to adopt a more aggressive pricing strategy. Output price inflation was strong and the highest in two years.
Finally, producers were increasingly confident that output would rise over the next twelve months. This level of optimism was the strongest since April 2024 and exceeded the historical average. According to panel members, expectations of improved economic conditions, new customer acquisition and expansion plans underpinned this positive outlook.
