The total value of new orders in the Slovak industry fell by 6% y/y to EUR 3.21bn in July 2013, deepening from a 4.2% decline in June and posting the worst annual growth reading since October 2009, data from the statistics office showed.

New orders in the vehicles manufacturing industry, which accounts for almost half of total orders, plunged 10.7% y/y in July, after a 2.3% annual decline in June. Slovakia hosts three big auto making plants, run by Germany’s Volkswagen, France’s PSA Peugeot-Citroen and South Korea’s Kia Motors.

The manufacture of computers, electronics and optics, the second most important sector for Slovakia’s export-oriented economy, recorded an 18.4% annual decline in new orders in July, softening from a 29.5% drop in the previous month.

On a monthly basis, seasonally-adjusted industrial orders rose 3.1% in July, following a 5.5% decline in June.

For the first seven months of the year, new industrial orders edged up by 0.2% y/y to EUR 24.53bn.

IntelliNews comment: The industrial orders data is another important economic indicator that worsened further in July after posting a surprising recovery in April. Exports, industrial sales and industrial output worsened in July. As the new orders data provides an insight into the future, we could expect a slowdown in the manufacturing industry, which is a key driver of Slovakia’s export-oriented economy. This is not consistent with the widely believed start of economic recovery in the eurozone, which is the country’s main trading partner. Particularly worrying is the deepening decline in orders in the car manufacturing industry, which was nearly the sole driver of Slovakia’s 2% economic growth in 2012. Concerns arise also from the fact that orders to the automotive sector have declined also on a monthly comparison basis in each of the three months to July.

Slovakia’s economic growth is widely expected to decelerate to below 1% this year due to soft foreign demand and subdued domestic consumption.