The Dutch industrial sector may be on the verge of reaching a turning point after a period of challenges and uncertainty. Recent data suggest that some improvement is on the horizon, although the Nevi Purchasing Managers' Index still remains below the neutral score of 50, with a recent rise from 48.9 in January to 49.3 in February. This indicates a slight improvement, but the sector still faces a number of problems.
One of the main challenges is the significant decline in industrial production in 2023, which, according to Statistics Netherlands, amounted to no less than 7.7 percent. This drop is the largest since the 2009 crisis and has affected various sectors, particularly machine building and energy-intensive industries such as the chemical and base metal sectors.
Despite these problems, however, there are also positive developments to be seen. The slight increase in employment and the cautious rise in new export orders point to a possible stabilization. In particular, the recovery of new orders in the final quarter of 2023, reported by ASML, brings some hope to the sector.
Nevertheless, high energy prices, driven mainly by external geopolitical factors, still pose a considerable challenge. The European Central Bank is concerned about the competitive position of European companies, given the significantly higher energy prices compared to those in the United States and China. This represents a serious threat to the traditionally strong position of European industry.
There is a growing call to accelerate the green transition as a possible solution to improve both energy dependence and competitiveness. However, this brings new challenges, such as grid congestion. Nonetheless, the recent drop in gas prices in February offers some relief. In addition, demand for energy-intensive products could increase as customers begin to draw down their excess inventories. While a full recovery to Europe's former competitive position seems unlikely in the short to medium term, there may well be opportunities for gradual improvement.