Czech June PMI data shows first notable improvement in over a year as output, orders rise.

By bne IntelliNews July 1, 2013

The purchasing managers index (PMI) for the Czech manufacturing industry stayed above the 50 points mark that signals expansion of the sector for the second straight month in June showing its first notable improvement in over a year, a survey compiled by financial information company Markit Economics for HSBC showed. The improvement came as output increased at a faster rate and orders grew for the first time in four months.

The index, which monitors output, new orders, employment, stock levels and prices in the goods-producing sector, edged up to 51 points in June from 50.1 points in May but stayed below its long-run trend level of 52.3.

New export business grew for the first time since October 2011 and helped total new orders register their second rise since the start of the year. Moreover, orders grew at a faster pace than in February.

Higher new business pushed output in the sector up to its strongest pace of increase in a year and consequently led to the first in 15 months increase in volume of inputs purchased by manufacturers.

Employment in the sector grew for the second straight month in June albeit at a marginal rate. Price pressures remained muted with input prices rising at a marginal rate, while manufacturers kept on reducing their output prices trying to stay competitive.

The PMI index averaged 50.2 in the second quarter of 2013, up from 47.1 in Q4 2012 and was above the 50-points threshold for the first time since Q1 2012. Commenting on the PMI data, Agata Urbanska, economist for Central & Eastern Europe at HSBC, said that Czech economy will contract in full-2013 despite expectations that from Q2 the GDP will start growing on a quarterly basis. Important downside risks to the Czech economy are said to be the absent recovery in China and the sub-50 manufacturing PMI in Germany, the country’s main trading partner, Urbanska added.


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