Czech PMI drops to 22-month low amid slower new order growth in September

Czech PMI drops to 22-month low amid slower new order growth in September
Czech PMI stumbles, falls to 53.4, lowest level in two years
By bne IntelliNews October 8, 2018

The Czech IHS Manufacturing Purchasing Managers Index (PMI) slipped to 53.4 in September from 54.9 in August, signalling a further slowdown, figures released by IHS Markit show. The latest reading was the lowest since November 2016 and well below the highs seen around the turn of the year.

The market consensus had anticipated a PMI of 54.4 in September. Any figure greater than 50.0 indicates an overall improvement in the sector.

Production levels followed a similar pattern to that of overall order books in September, rising at a reduced rate that was the weakest for 22-months.

The data show that Czech manufacturing sector lost further momentum at the end of the third quarter as order book growth eased to the weakest for nearly two years.

"The Czech manufacturing sector looks to be entering a more challenging phase, with growth having peaked around the turn of the year and the PMI continuing to show a steady loss of momentum. Output, new orders and employment all rose during September, but these latest increases paled in comparison to those seen earlier in the year.” said Phil Smith, IHS Markit economist. 

September also posted a slower increase in both output and employment across the sector, while businesses became less optimistic about the outlook. Higher costs in the manufacturing sector were reflected in a further rise in average factory gate prices. The rate of output charge inflation was slightly quicker than in August and well above the long-run average.

“Manufacturers generally still expect to see output levels rise over the year ahead, though worries about trade wars and a loss of competitiveness due in part to rising costs have dampened confidence and expectations are among the gloomiest over the past five years.” Smith adds.

September saw the steepest monthly rise in average input costs faced by Czech manufacturers since last October. The rate of purchase price inflation was among the highest seen over the past seven years. A range of inputs were reported as up in price, including energy, fuel and metals.