Czech industrial production slowed its year-on-year decline to 11.9% in June from 25.7% in May, shows data from the Czech Statistics Office published on August 6.
“Looking at the y/y comparison, it remains 7% lower, but it still surpassed expectations. New orders also improved in June and foreign orders reached last year's level,” said ING chief economist Jakub Seidler.
Seasonally adjusted industrial production increased by 13.4% month-on-month. Sales from industrial activity at current prices dropped by 5.8% y/y in June. Direct export sales of industrial enterprises decreased at current prices by 3.0%. Domestic sales, which also include indirect export via non-industrial enterprises, decreased at current prices by 9.6%.
“The improvement in Czech industrial production was broad-based, although most segments remained in y/y decline. Compared with the May figures, which deteriorated in almost all industrial segments, the June development was the opposite,” Seidler said.
The value of new orders decreased by 3.4% y/y. Non-domestic new orders fell by 0.1%, while domestic new orders decreased by 10.3%. The average registered number of employees in industry dropped by 3.8% y/y in June, with the average gross monthly nominal wage going up by 0.7% y/y in June.
“In comparison to May, car production increased by 42% m/m but remained 7% lower y/y. Car production fell by 46% y/y in the 2Q20, and by 27% in the 1H20, which illustrates the intensity of the impact of the coronavirus crisis on the domestic industry,” Seidler noted, adding that in general the recovery is rather slow, as indicated by previously published leading indicators.
Seasonally adjusted industrial production posted a decrease by 18.7% in 2Q20 compared to 1Q20. In the y/y comparison, it decreased by 23.7%. Sales from industrial activity at current prices declined by 23.6% y/y in 2Q20.
Direct export sales of industrial enterprises decreased at current prices by 26.1%. Domestic sales, including indirect export via non-industrial enterprises, dropped at current prices by 20.2% in 2Q20.
As Seidler noted, despite the positive June readings indicating a recovery in industry, the domestic industry will be hit hardest by the COVID-19 crisis this year.
“According to the latest consensus expectations of analysts for Focus Economics, the domestic industry is expected to fall by almost 12% this year, while the German industry by around 10%. Critical will be the developments in the automotive segment, which have been doubly hit hard this year, by the COVID-19 crisis and new emission norms standards,” Seidler stressed.