Czech Republic PMI September 2016

Czech Republic

Manufacturing PMI moves further into expansionary territory in September

The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit rose from August’s 50.1 to a four-month high of 52.0 in September. This brings the indicator further above the 50-point threshold which separates expansion from contraction in the manufacturing sector, but it remains below its long-term trend.

September’s increase mainly reflected an expansion in new orders, which followed two months of decline, and in output, which grew at the fastest rate since April. On the external front, new export orders remained broadly unchanged. Moreover, employment rose for the 41st month in a row and the rate of job creation was the fastest since May. Manufacturers’ purchasing of inputs grew for the first time in three months, although at a weak pace. Regarding price developments, input prices increased for the fifth consecutive month, while output charges remained broadly unchanged.

Trevor Balchin, Senior Economist at IHS Markit, commented that, “although at a four-month high in September, the PMI is currently averaging 53.0 in 2016 so far, below its trend levels for both 2014 and 2015. Correspondingly, IHS Markit is currently forecasting industrial output to rise by 3.1% in 2016, the weakest rate of expansion in three years.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 1.1% in 2016, which is down 0.9 percentage points from last month’s projection. For 2017, panelists expect fixed investment to expand 2.7%.

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Czech Republic PMI Chart

Czech Republic PMI September 2016

Note: IHS 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: IHS Markit.

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