Biggest production decrease ever in Dutch industry, not as bad as rest of EU

The economic consequences of the coronavirus resulted in a record decrease in production for Dutch industry. As a result, the confidence Dutch purchasing managers have in economic developments dropped to the level of May 2009. The situation in the rest of Europe looks quite a bit worse, according to the purchasing managers index (PMI) by Nevi, a training center for purchasing managers and supply chain managers, RTL Nieuws and Financieele Dagblad report. 

The PMI measures the performance of the processing industry. Nevi sends a survey every month to 400 companies that are representatives of Dutch industry, asking bout production, new orders, purchased material, stocks, employment and delivery times. This provides insight into the economic growth an purchasing managers' confidence. A PMI score above 50 indicates growth, below 50 indicates decline.

The Dutch PMI score for April 2020 stood at 41.3, down from 50.5 in March. That is the biggest decrease ever in one month. But the index for the entire eurozone looks quite a bit worse, dropping from 44.5 in March to 33.4 in April. According to FD, the industry in all other eurozone countries scored worse than in the Netherlands. Ireland and Germany are best off with PMI scores of 36.0 and 34.5 respectively. France, Spain, Italy and Poland all have scores around 31. 

Nico Klene of ABN Amro told FD that the Netherlands' "intelligent lockdown" helped dampen the blow for Dutch industry. "I have no doubt that the degree of lockdown plays a role," he said. "Germany also has a less strict social abstinence, which explains why Germany also performs less badly than the average. This also has an effect on Dutch industry, which makes a lot of deliveries to German industry."

According to Klene, it was already clear in March that industry in the Netherlands was doing better than elsewhere in Europe. He sees the results of April as a new indication that the Dutch economy may suffer less from the coronavirus than other economies, according to the newspaper. 

Another ABN Amro economist, Albert Jan Swart, told RTL Nieuws that it will take Dutch industry a while yet to recover. "Many companies will have little demand for a longer period of time. It makes no sense to invest if you are also short on cash," he said, pointing out that Dutch industry is largely focused on exports, so what is happening in the Netherlands itself only plays a small role. "70 percent of what is earned in the sector is earned from exports. The global picture is much more important. It must be clear when we can return to a normal situation without restrictions, only then will confidence be restored."

According to the Nevi figures, the Netherlands saw a very sharp decline in production and the number of new orders in April, with production falling from 48.5 in March to 33.3 in April, and new orders falling from 44.9 to 29.3. The employment index fell from 49.0 in March to 39.9 in April - the biggest decrease in staff numbers since July 2009.