Czech industrial production growth eases to 5.5% y/y in Jan 2014, misses expectations

By bne IntelliNews March 14, 2014

Czech industrial production increased for the seventh straight month in January 2014 rising by 5.5% y/y, supported by an expanding auto sector, data from the statistics office showed. Yet, the growth eased from a 2.5-year high of 9.3% y/y in December and missed market expectations for a 6.7% rise.

The seasonally adjusted industrial production went down by 0.5% m/m in January, following a 0.3% m/m drop in December.

The annual growth in January was mainly supported by car production that increased by 15%, easing from a 17.8% y/y rise in the previous month. Other sectors that contributed the most to the annual hike were manufacture of fabricated metal products (contribution +0.9 pps, growth by 10.5% y/y) and manufacture of rubber and plastic products (contribution +0.8pps, growth by 11.9% y/y). Industrial production declined the most in electricity, gas, steam and air conditioning supply (contribution -0.4pps, drop by 2.3% y/y) and printing and reproduction of recorded media (contribution -0.1pp, drop by 7.3% y/y).

Overall, the manufacturing industry expanded for the seventh month in a row in January but the annual growth weakened to 7.6% from 11.8% in December. The mining and quarrying industry shrank by 0.9% y/y in January, after expanding by 1.8% y/y the month before, while the annual decline in the utilities sector deepened to 2.3% from by 0.5%.

Sales from industrial activity advanced by 9.4% y/y in the first month of 2014 driven by a 16.6% hike in export sales. New industrial orders also increased albeit at a softer pace than in December. Stronger foreign demand pushed new orders up by 12.6% y/y in January but a 1.3% decline in domestic orders kept the annual growth below the December’s growth of 20.5%, which was the strongest in more than three years.

IntelliNews comment: The seventh straight increase in Czech industrial output in January signals signs that the economy is gaining strength after exiting a record-long recession in 2013. In 2013 Czech industrial production edged up by 0.5% from 2012 when it shrank by 1.2%. Rising new orders are a positive sign that the sector will continue improving in the next months driven by growing foreign demand. One of the important forward-looking indicators, the purchasing managers index (PMI), also shows that the recovery is on track with the index staying above the 50-mark that signals expansion for the tenth consecutive month in February.


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