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Dutch Manufacturing Sector Contraction Worst Since May 2009

The Dutch manufacturing sector contracted at the fastest rate in eleven years in May, amid the coronavirus, or Covid-19, pandemic, survey results from IHS Markit showed on Tuesday.

The NEVI manufacturing Purchasing Managers' Index, or PMI, fell to 40.5 in May from 41.3 in April. Any reading below 50 indicates contraction in the sector. This was the lowest level since the global financial crisis in May 2009.

Output declined at the second-fastest pace in record in May, and new orders fell for the third straight month with the rate of reduction quickest on record.

The volume of new work from abroad decreased in May and the rate of reduction was the quickest in the series' more than twenty-year history.

The number of workforce was reduced in May, with the rate of decline the second quickest in nearly eleven years. The rate of backlogs of work depletion was the fastest seen over seven years.

The volume of input orders fell at the most marked rate since April 2009, and stocks of input declined for the first time since February and at the quickest pace for seven years.

On the price front, cost burden declined for the second month in a row with the rate of deflation quickest since April 2016, and average charges were reduced in May to improve sales and attract new business.

The 12-month outlook remained negative for second straight month in May as companies reported uncertainty related to the Covid-19 pandemic.

"Some companies, such as producers of packaging for consumer goods, will probably benefit from the easing of 'lockdowns', both domestically and abroad," Albert Jan Swart, manufacturing sector economist at ABN AMRO, said.

"However, demand for investment goods in particular is expected to remain sluggish in the short term."

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