The Czech manufacturing PMI index compiled monthly by the S&P Global market intelligence company posted 48 in May (chart), in a disappointing drop from 48.9 in April, when PMI posted its highest since 2022, and ended the upward trajectory from recent months.

“May data signalled a step backwards from the febrile signs of improvement across the Czech manufacturing sector seen in April, as new orders returned to contraction territory and output fell at a sharper pace,” commented Sian Jones, principal economist at S&P.

“Economic uncertainty and challenges in the automotive sector dampened the overall performance of the goods-producing economy, according to panellists,” she added.   

S&P reported that Czech manufacturers registered a renewed drop in sales and that uncertainty in the country’s robust automotive sector underscored the weak domestic and external demand. Although the pace of decline in new export orders was softer, it nonetheless fell for the 39^th consecutive month.

Manufacturers also reported shortages in the supply of material and cost burdens, including higher energy bills, and continued staff reductions.

On the upside, post-production inventories expanded in May at the fastest acceleration since September 2022 despite the still modest growth, and output expectations for the remaining part of the year also improved.

“Firms were the most upbeat regarding the outlook since February 2022,” Jones stated, concluding that “hopes of a rebound in demand from existing markets outweighed concerns surrounding global economic uncertainty.”