Czech industrial non-adjusted production increased by 4.8% year-on-year in November 2018, in line with the analysts´ expectations, and seasonally adjusted at constant prices by 0.9% month-on-month, the Czech Statistics Office reported on January 8. The value of new orders increased by 5.3% y/y. Despite double-digit growth in the automotive segment, new orders remained low.
“Industry in November did not repeat its strong result of the previous month, as a working day adjusted 1.5% increase is the weakest in this methodology for the past six months,” said UniCredit Bank analyst Patrik Rozumbersky. Insignificant growth, he added, fits into the picture of gloomy market moods and weak European figures published in recent days. Among them, unexpectedly strong fall in production and new orders in Germany in November is a warning signal for industrial firms in the Czech Republic.
The y/y growth of industrial production was contributed by manufacture of motor vehicles, trailers and semi-trailers (up by 10.2%), the fastest pace since April 2018, manufacture of other transport equipment (growth by 48.3%), and manufacture of computer, electronic and optical products (up by 17.8%).
“Since October, the automotive sector and the production of other transport equipment have improved after several weak months, but new orders are still not providing more optimistic prospects for this most important Czech industry,” said ING Chief Economist Jakub Seidler.
The value of new orders increased by 5.3% y/y in November 2018, due to increase in manufacture of computer, electronic and optical products, manufacture of other transport equipment. Non-domestic new orders increased by 3.2%, while domestic new orders grew by 9.7%.
“Aside from new orders in the car segment, today's figures from domestic industry seem solid. However, foreign demand is one of the main risks to the future. German industrial growth in November fell by almost 2% month-on-month, the biggest drop since the summer of 2015. While part of the story will be related to the impact of new emission standards in the automotive industry, it is becoming more evident that the problem is also related to the weaker global economy,” Seidler added.