Czech PMI rebounds in April on sharp increase in output, orders

By bne IntelliNews May 2, 2014

The purchasing managers index (PMI) for the Czech manufacturing industry rebounded in April 2014 supported by a sharp rise in output and new orders, a survey compiled by financial information company Markit Economics for HSBC showed.

The index, which monitors output, new orders, employment, stock levels and prices in the goods-producing sector, increased to 56.5 points in the fourth month of the year from March’s 55.5 staying above the 50-point mark for the 12th straight month and also above the long-run average of 52.5. All five components of the PMI provided positive contribution.

New orders rose for the 11th month in a row in April with the rate of growth the second-fastest in more than three years. Improving new business inflows helped output in the sector increase for the 13th straight month in April and the pace of expansion remained close to February’s 34-month record.

Rising workloads and positive demand expectations pushed employment in the Czech goods-producing sector up for the 12th successive month in April when it advanced at the fastest rate since October.

Stronger new order growth resulted in the fastest increase in purchasing activity in three years which in turn led to suppliers’ delivery times lengthening to a greater extent and also to a rise in input stocks at Czech manufacturers for the eighth time in nine months, Markit said.

Price pressures moderated in April with input prices increasing at the weakest rate in six months and output prices declining for the third running month.

Commenting on the PMI data, Agata Urbanska-Giner, economist at HSBC, said that the rebound in the PMI index in April supports expectations that the country’s economy will expand in the coming quarters and will be accompanied by a gradual increase of inflation. But the PMI survey does point to downside inflationary risks and at this point and HSBC does not expect any policy change. In particular, the central bank is likely to continue with FX interventions until the end of 2014.

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