Czech Republic PMI June 2017

Czech Republic

Czech Republic: Manufacturing PMI continues to signal strong expansion in June

July 3, 2017

The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit In June remained unchanged at May’s 56.4. Consequently, the indicator remains comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

June’s result reflected strong growth in production and new orders. Output recorded the eleventh consecutive month of expansion, thanks to robust domestic and external demand, although its rate of expansion was the slowest since January. The pace of growth in new orders decelerated slightly but remained robust overall, while on the external front new export orders continued to expand healthily. This translated into another month of job creation, with employment expanding at a three-month high, and increasing backlogs of work. Regarding price developments, growth in input prices eased but remained strong overall, driven by higher prices for raw materials. Output prices rose as a result, but a more moderate pace than in the previous month, as companies sought to pass on higher costs.

Sian Jones, Economist at IHS Markit, commented that, “The June PMI signaled a continuation of the strong growth seen throughout the first half of 2017, although overall expansion was slightly softer than the first quarter. […] That said, firms signaled that capacity constraints were not being fulfilled fast enough by new recruits. This was demonstrated through backlogs which increased at the fastest pace since July 2011. Concerns were raised anecdotally regarding threats to future growth potential as labour shortages become more apparent.”

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, Economist

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