Czech Republic PMI May 2017

Czech Republic

Czech Republic: Manufacturing PMI dips but continues to signal strong growth in May

June 1, 2017

The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit dipped from 57.5 in April to 56.4 in May. However, the indicator remained comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

May’s result reflected strong growth in production and new orders. Output recorded the tenth consecutive month of expansion, thanks to robust domestic and external demand. The pace of growth in new orders was little-changed from the previous month, while on the external front new export orders expanded at the second-fastest pace since January 2015, supported by increased demand from EU countries. This translated into another month of job creation, though the backlog of work still climbed due to increasing labor shortages. Regarding price developments, growth in input prices eased but remained strong overall, driven by higher prices for raw materials and rising wages. Output prices rose as a result, as companies sought to pass on higher costs.

Sian Jones, Economist at IHS Markit, commented that, “May PMI data indicated a continuation of the solid growth seen so far in 2017. […] The latest official data from the Czech Statistics Office stated the overall economy grew by 2.9% in Q1 2017. PMI data for April and May signal a continuation of this upturn.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 3.2% in 2017, which is unchanged from last month’s projection. For 2018, panelists expect fixed investment to expand 3.6%.

Author: Massimo Bassetti, Senior Economist

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