Tuesday 29 November 2022

Latest sign of recession as purchasing managers’ index records falling activity

Photo: depositphotos

The Dutch purchasing managers’ index (PMI) has dropped below the crucial level of 50 for the first time in two years, strengthening fears that a recession is imminent.

The PMI, measured by managers’ association Nevi, is based on a monthly survey of supply chain managers to gauge their perceptions of whether market conditions are expanding or contracting.

The index figure fell from 52.6 in August to 49.0 in September. A score below 50 means the majority of managers see a reduction in economic activity. The drop of 3.6 is also the fifth largest since Nevi started the index in 2000.

Dutch producers received fewer new orders from abroad in September for the first time in two years, reflecting weakening demand in China, rising inflation and uncertainty about the economic future.

Economist Albert Jan Swart of ABN Amro told NOS that the slowdown was also driven by the high cost of energy and materials and the disruption to the global economy caused by Russia’s invasion of Ukraine. Purchasers of minerals and parts are the first to experience a fall in orders, he said.

However, Nevi also said there were positive signs in the figures, including an increase in jobs in industry and more purchases of machinery. The latter may be due to manufacturers replacing older equipment with more energy efficient models.

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