Czech industry decreased by 2.7% year on year and by 1.6% month on month in March, the Czech Statistical Office (CZSO) reported.

The drop comes after a slight 0.7% y/y increase in February, which ended a three-month skid in industrial output.

“The y/y decrease […] was influenced the most by two factors,” commented Radek Matejka of CZSO commented. “The first one was an extraordinarily high comparison basis in the manufacture of motor vehicles last year. The second one was a continuing decrease in the manufacture of machinery and equipment,” he said.

CZSO report listed the manufacture of pumps, agricultural and metal forming machinery as decreasing, as well as the manufacture of fabricated metal products and the manufacture of basic metals.

The report comes as the Czech industry is closely watching the developments around the struggling largest Czech steel mill, Liberty Ostrava, which is pursuing restructuring and announced earlier this week that it is ending cooperation with key energy supplier Tameh Czech.  

CZSO also reported that the value of new orders in the industry increased by 5.1%. “In the manufacture of motor vehicles, trailers and semi-trailers, the increase of the value of new orders was partially influenced by the low comparison basis from the last year but also by an increase of the entire economic activity,” commented Veronika Dolezalova, head of the Industrial Statistics Unit at CZSO.   

“The value of newly concluded orders also increased in the manufacture of electrical equipment, especially the manufacture of lighting equipment of cars,” Dolezalova added.  

CZSO also reported on the dramatic y/y decrease in the construction output of 8.3% in March, the worst monthly result in three years, Czech Television (CT) noted. In m/m terms, construction decreased by 7.8%.

“While the y/y decrease was fully owing to the building construction, the m/m one was contributed to more by civil engineering construction,” said the head of the Construction Statistics Unit of CZSO, Petra Curinova.

“The approximate value of the constructions permitted in March reached CZK66bn (€2.6bn) and it increased by a half y/y,” CZSO’s Matejka said, adding that “this increase was significantly influenced by granting a building permit to six constructions with budgets over CZK1bn. Should we deduct those, the approximate value would have decreased by 7%.”

The number of started dwellings decreased by 17.6% y/y to 2,706 dwellings “due to drop in family houses,” CZSO noted. The number of homes in apartment buildings increased y/y.

Local analysts surveyed by CT expected the drop in industry, but several did not hide their surprise about how deep it was. “The basic story is not changing – demand is missing. Both domestic and local,” Banka Creditas analyst Petr Dufek was quoted as saying.   

Despite the stark performance in construction, Jan Vejmelek, an economist at KB, Societe Generale’s local branch, said the construction could still end in annual growth this year.