Dutch manufacturing sector sees strong increase in exports

This is evident from the Nevi Dutch Manufacturing PMI, which fell slightly in August, from 54.4 to 53.8. The level is still well above 50 and therefore still indicates steady growth of the Dutch manufacturing industry. The Nevi survey of approximately 350 purchasing managers shows that the number of new export orders picked up strongly in August, at the fastest pace in more than four years. Demand from the United States, Australia and African countries, among others, increased sharply. This could be the result of the renewed effective closure of the Strait of Hormuz, which continues to disrupt exports from the Middle East of oil, oil products and chemical products such as plastics. It is therefore possible that Dutch industry still benefits from the hoarding of parts and materials by industrial companies. At the same time, strong purchases are related to growing production.

Buying and selling prices continue to rise rapidly, but at the slowest pace since the start of the war with Iran in late February this year. In addition to oil and oil products, transport has also become more expensive, partly due to disruption of container shipping, higher fuel prices and the Dutch truck levy introduced in July.

Possible German boost

Figures from Statistics Netherlands (CBS) show that the growth in Dutch industrial production is largely driven by the machinery industry, which is benefiting from a growing demand for chip machines thanks to the AI boom. The petroleum industry has also shown strong growth, especially since April. The demand for Dutch oil products has increased due to the closure of the Strait of Hormuz and the strikes on Russian refineries by Ukraine.

However, the chemical industry benefitted less from the disruption of the industry in the Middle East. According to Statistics Netherlands, production is even lower than in the same period a year ago, although some chemical companies will benefit from the increased prices as a result of the scarcity. Production in the building materials industry rose slightly, thanks to the growth of the construction sector.

In many other industries, such as metal products and electrotechnical products, production is still under pressure, despite the expected increase in demand for parts and materials for chip machines. This may be because other sales markets are under pressure, such as the German car industry. Nevertheless, there are now also positive signs from Germany. S&P Global's preliminary purchasing managers' index for German industry points to the fastest increase in production in more than four years for August. Germany also seems to be benefitting from hoarding behaviour due to the effective closure of the Strait of Hormuz and from the increasing demand for materials for data centres for AI applications. Germany also has a sizeable defence industry that benefits from the sharply increasing defence spending of the European NATO member states. The confidence of German entrepreneurs has improved, as shown by both figures from S&P Global and the Ifo index.

Entrepreneurs remain quite optimistic. Recently, producer confidence at Statistics Netherlands also improved. Business confidence is also improving in Germany. Since Germany is the most important foreign market for the Dutch manufacturing industry, this is a positive signal.