Czech Republic: Manufacturing PMI bounces back in August but remains entrenched in contractionary territory
September 2, 2019
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, bounced back to 44.9 in August from 43.1 in July, which had marked the worst reading in over a decade. Despite the upturn, the index remains well below the critical 50-point mark separating expansion from contraction in activity in the manufacturing sector, where it has been for the past nine months.
August’s increase was mainly driven by softer falls in both output and new orders. That said, the decline in new business from abroad was the sharpest in over a decade, largely reflective of weak external demand conditions amid intensifying global trade conflicts. Moreover, the milder drop in production was due to the clearing of backlogs of work. On the price front, input cost inflation remained muted while selling prices fell for the first time in nearly three years. Lastly, manufacturers cut jobs for the sixth month running in August, and confidence levels slipped to their lowest since December 2012.
Author: Javier Colato, Economist