The industry is heading in the right direction again

The NEVI purchasing managers index rose to 49,3 in February. In January it was still 48,9 when the index made a big jump in the right direction. The somewhat comparable figure on producer confidence in the industry from CBS also showed an improvement in February, but in the CBS series the improvement is less convincing. I am pleased with that NEVI figure.

Of course, it's still below 50, so formally conditions are still deteriorating. But things are going in the right direction. In addition, several important sub-indices recorded above 50. According to the survey, industrial employment is increasing again and export orders are finally increasing again.

Our purchasing managers index is currently clearly higher than that in the countries around us. In Germany, for example, the figure for February is only 42,3 and for the eurozone as a whole it is 46,1. The difference can probably be explained by our industrial structure. While 'old industries' dominate in Germany, our country is characterized by a few strong IT companies. Internationally, it is undeniable that the sector is doing well. You see this of course on the stock exchanges, but also in the production figures of a country like Taiwan. For the first time since May 2022, production levels in Taiwan's industry, which is heavily dominated by chip companies, were higher in January than a year earlier.

Inflation lower, but…
Dutch inflation was 2,8% in February, after 3,2% in January. That's going in the right direction. Food became 2,7% more expensive, after 4,1% in January. Fortunately, there is finally normalization here. The figure is certainly positive and I don't want to spoil the mood, but I would like to make a few comments. First, prices rose 0,6% month-on-month in February. In January the price increase was already 0,5%. Now, these are not seasonally adjusted figures, so caution is required with the interpretation, but an increase of 1,1% in two months is not nothing. I would also note that although the price increase for services decreased slightly compared to January, it is still significant at 4,5%. Finally, I would like to note that rents in our country are heavily regulated. Rents make up more than 20% of the inflation basket. If you only look at the other 80%, inflation in February was not 2,8% but 3,5%.

Quack
The international economy continues to struggle a bit. In February, the value of the 'Economic sentiment indicator' for the eurozone, which is compiled by the European Commission, fell. This index includes the confidence of both entrepreneurs and consumers. It was the second decline in a row, after an improvement had been noted in previous months. The figure is clearly below the long-term average.

Container transhipment in the seaports in Northwest Europe (Hamburg, Bremen/Bremerhaven, Rotterdam, Antwerp, Zeebrugge and Le Havre) is also not going well. The index of the German RWI/ISL has been declining for some time and showed a notable further decline in January, although the accompanying press release says that this decline is probably due to the problems in the Red Sea. Hopefully the sharp decline in January is temporary.

In January, container throughput in Chinese ports increased sharply, although RWI/ISL writes that the timing of the Chinese New Year has probably led to a flattening.

Closing
The confidence of Dutch industrial entrepreneurs is improving and those entrepreneurs are less pessimistic than their European colleagues. I think we should mainly look for the cause of that difference in the IT area.

The international economy is not going so smoothly yet, but we can still count on some more growth this year.

Dutch inflation fell in February. That is good news, but I still think it is too early to raise the flag.

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

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