The Netherlands’ manufacturing sector expanded at a record pace in March as rapid growth in output and new work offset the impact of severe supply chain disruptions and stronger inflationary pressures.
The manufacturing purchasing managers’ index, or PMI, climbed to 64.7 from 59.6 in February, survey data from IHS Markit and ABN AMRO showed Thursday. A reading above 50 suggests growth in the sector.
Production growth was the fastest since February 2018 and order book volumes grew at a record pace. Export demand for Dutch goods was also the strongest in the survey history.
Average lead times for inputs were the longest since data collection began in March 2000, thanks to supply constraints and stock shortages amid surging demand. Further logistical problems amid ongoing coronavirus disease 2019 restrictions also contributed to delays.
“Even though suppliers’ delivery times are slowing down production, with some car factories temporarily shutting down because of shortages, output growth has accelerated,” ABN AMRO economist Albert Jan Swart said.
“The big question is whether firms can continue to increase output during the following months amid further supply chain disruption.”
The economist expects the Suez Canal blockage that began on March 23 to lead to even longer delivery times and higher input costs in April.
Though the blockage has ended, ships will arrive at the same time as many other ships that have sailed around the Cape and this will most likely cause chaos in European ports, which would lead to even more delay, the economist added.