Further decline in production volumes in February despite an increase in new orders

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 came in at 50.0 in February, compared with 48.4 in January, indicating unchanged business conditions in the Dutch manufacturing sector. This marks the end of a seven‑month period of contraction. Ongoing declines in stocks of materials, employment and production volumes were exactly offset by growth in new orders and longer delivery times (which typically signal demand pressure in supply chains).

New orders rose in February for the first time in eight months, although the increase remained modest. This was partly due to the inflow of new projects. All three subsectors covered by the survey recorded renewed growth in new orders, although the increases in consumer goods and intermediate goods were limited.

However, the rise in new orders was driven mainly by domestic demand, as foreign sales fell again — albeit less sharply than in the previous month.

Despite the stronger overall demand, Dutch manufacturers once again reduced their production volumes in February.

This decline was moderate and the smallest in the current eight‑month period of contraction.

At the same time, the lower production volumes led to further decreases in both purchasing activity and stocks of materials. As with production, these declines were smaller in February than in the previous month.

Companies that did purchase materials reported longer average delivery times. The deterioration in supplier performance was attributed to shortages of raw materials and delays in shipping routes.

Despite the lower demand for materials, overall cost pressures increased in February. According to respondents, inflationary pressures stemmed from higher labour and raw‑material costs, partly linked to current and proposed import duties. Inflation was substantial and the highest in more than two years.

In an effort to pass on part of these cost increases to customers, selling prices were raised again, although slightly less sharply than in the previous month.

The volume of outstanding or unfinished work fell once more, and to a greater extent than in January. Companies had sufficient capacity to complete orders, despite the continued decline in employment. Some firms reported hiring freezes and not replacing departing staff. Job losses were modest and similar to those seen in January.

Looking ahead to the coming year, Dutch manufacturers remained confident that production volumes will rise from current levels. The share of optimists far exceeded the number of pessimists (45% versus 7%). This level of confidence was historically high and comparable to January. Panel members attributed the positive outlook to favourable growth forecasts and an expected improvement in market conditions.