Czech Republic PMI May 2016

Czech Republic

Manufacturing PMI inches down in May

In May, the manufacturing Purchasing Managers’ Index (PMI), elaborated by Markit, fell from April’s 53.6 to 53.3. Nevertheless, the manufacturing PMI remained above the 50-long-term average that indicates expansion in the manufacturing sector, where it has been since May 2013.

Rising employment, as well as an increase in the backlog of work and exports all helped to support the PMI and keep the index about the 50 threshold. However, May marked the fourth consecutive month of moderation of the index, as new orders continued to show weakness. On the bright side, May’s reading, albeit the lowest in almost a year and a half, marked nearly eight years of sustained growth in the sector.

Markit commented that, “the PMI fell for the fourth month running in May, mainly reflecting a further slowdown in output growth. With new orders continuing to rise at a subdued pace, output looks set to expand in the near term at a sluggish rate. That said, backlogs at manufacturers continued to grow, exports rose at the strongest pace in three months and firms have not stopped expanding their workforces, suggesting an outright downturn in the sector is not imminent. The latest survey also highlighted a rise in input prices for the first time this year.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 1.3% in 2016, which is down 0.1 percentage points from last month’s projection. For 2017, panelists expect fixed investment to expand 3.2%.

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Czech Republic PMI Chart

Czech Republic PMI May 2016

Note: Markit Manufacturing Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Markit.

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