The Czech manufacturing PMI index compiled monthly by the market intelligence company S&P Global Market Intelligence posted 52.2 in July (chart). This is down from 53.9 posted in June, which was the best result since April 2022.

The PMI index has remained on or above the 50 point mark separating growth and decline since February, the longest such stretch since 2022.

"The Czech manufacturing sector registered a slight loss of momentum at the start of the third quarter,” commented Siân Jones, principal economist at S&P Global Market Intelligence in a press release seen by IntelliNews.

“Although new orders grew at only a slightly slower pace than in June, further delays to supply chain movements and cost considerations led to a less marked expansion in output and pushed firms to rein in input buying, limit stock growth and cut workforce numbers,” she added.

Despite some cooling down in July input and output costs inflation remained record high particularly as a result of price growth of key materials. Slight expansion of new sales helped maintain the overall growth trajectory in manufacturing, however.

Although the Czech manufacturing sector is viewed by local market analysts as largely immune to the volatile international environment, some S&P Global panellists attributed the burden posed by the elevated costs to the conflict in the Middle East.

Reduction in workforce and continued delay in material deliveries were also reported as behind the July accumulation in backlogs of work. Despite signs of stabilisation since the eruption of the conflict, costs of deliveries related to chemicals and oil continue to rise and companies remain forced to pass on higher costs to customers.

Optimism remained strong among the panellists, in anticipation of a rise in output levels in the coming year, but “eased to a three-month low during July,” S&P Global reported.

“Geopolitical events underpinned price pressures and worsening supplier performance again, with any future movements in inflation likely to still be dependent on developments in the Middle East," Jones concluded.