Czech Republic: Manufacturing PMI climbs but remains deep in the red on continued Covid-19 impact
June 1, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, crawled back up to 39.6 in May from 35.1 April, which had marked the lowest reading in over a decade. Despite the increase, however, the index remained well below the critical 50-mark separating deterioration from improvement in the health of the manufacturing sector, where it has been for over a year.
May’s climb was driven by less pronounced declines in production and new orders; that said, the falls were still steep as the Covid-19 pandemic continued to subdue demand, which also weighed on export orders, particularly in the key automotive segment. Amid weak demand, excess capacity and business pessimism regarding the future, manufacturers cut employment once again, and at the second-fastest clip since mid-2009. On the price front, goods producers lowered their selling prices again in a bid to attract customers, while input cost inflation eased. Lastly, business confidence remained downbeat, with concerns persisting over the duration of current conditions before they improve.
Author: Javier Colato, Economist