Regular readers of this blog know that I like referencing the Netherlands as the 'leading' indicator for the Euro area growth for a number of reasons:
- The Netherlands have a stable, even 'boring' economic make up, combining (despite a relatively small size) healthy drivers of domestic demand and investment with robust exporting economy;
- The Netherlands supply side of the economy is also relatively well balanced with strong domestic and exports oriented manufacturing and services;
- The Netherlands are a major entry port for the Euro area imports and the shipping and logistics hub for its exports;
- The Netherlands are well-positioned to serve as lead indicators for household investment cycles changes.
With that in mind, yesterday's PMI for Manufacturing is disappointing:
Several things come to view:
- Dutch manufacturing posted a "broadly flat output in December. This reflected a combination of a slower fall in new orders and a further reduction of backlogs. Jobs were cut at a weaker rate, while input price inflation eased and output charges were raised at a faster pace.
- NEVI PMI rose to 49.6 in December from 48.2 in November, marking the highest reading in three months. Despite this, the index remained below 50.0, implying stagnation-to-reduction in activity. The index is compounding, which means that December decline came on top of declines in November and October.
- New orders fell for the third month running in December, although at slowest rate of decline.
- Export sales rose for the sixth consecutive month, although the increase was the slowest in 6 months period.
- Input prices eased, but remained in strong inflationary territory, while output prices rose modestly. This means profit margins shrunk.
Not quite ugly, but certainly not pretty.
The ugliness is being played out in its property market.Up to 10% drops in Amsterdam and satelite towns in the last year.
The Dutch are really angry re transfers to the PIIGS.They personalise the resentment and are not open to discussion on the matter;this is anecdotal observation.
However it points to the possibility that a country such as the Netherlands could refuse to pay up and leave in a first strike response.
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