Czech industrial production swung to an increase of 13.1% y/y in August following July’s steep decline of 14.1% y/y, data from the statistics office showed on October 7.
Although July’s figure was considered an aberration caused by company-wide holiday breaks and energy and chemical outages, August’s outcome greatly exceeded the 8.3% y/y median market expectation of analysts. However, the surge looks likely to be something of a one off.
Working days adjusted industrial production increased 7.7%, the stats office noted. There were two more working days in August this year than last.
The main driver was car production, which soared 53.1% y/y to continue a trend of double-digit growth seen for more than a year in this essential segment. The second best performer was rubber and plastic products, which gained 17.1% y/y.
Raiffeisenbank noted that the headline industrial production figure benefited not only from the extra working days but from “the very low base from the previous year”. As was the case with the contraction in July, which was “an extreme outlier,” the analysts point out, the surges in August appears unlikely to persist.
August saw significant negative contributions from electricity, gas, steam and air conditioning supply (down 7.2%) and electrical equipment (down 12.9%) and the manufacture of basic pharmaceutical products and pharmaceutical preparations (down 15.9%).
The value of new orders rose 18.7% y/y following July’s decline of 16.2% y/y. Direct export sales of industrial enterprises in August increased at current prices by 19.6%.
On October 3, the latest purchasing manager indices (PMI) suggested Czech industry, and Central European factories in general, are continuing to see activity rebound after several weak months. The turnaround followed early signs of an uplift in the Eurozone and renewed confidence in Germany – the destination for the vast majority of exports out of the Visegrad states.
However, while the industrial figures improved, a separate release from the statistics office showed that the Czech construction sector’s woes – linked to a sharp fall in EU funds for public projects – are continuing. Construction output dropped 5.9% in August. That was, nevertheless an improvement on the 16.3% y/y and 12.4% y/y falls seen in July and June, respectively.