Czech Republic PMI April 2017

Czech Republic

Czech Republic: Manufacturing PMI continues to signal strong growth in April

May 2, 2017

The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit remained at March’s 57.5 in April. The indicator therefore remained comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

April’s result reflected faster growth in production and new orders. Output growth recorded the strongest result in almost three years, marking the ninth consecutive month of expansion, and came on the back of greater domestic and external demand. In addition, new orders grew for the eighth month in a row and at the fastest pace since May 2014. On the external front, growth in new export orders accelerated, supported by increased demand from EU countries, and U.S. job creation continued, but at a reduced pace, meaning the backlog of work climbed significantly in April. Regarding price developments, input prices grew at one of the fastest rates in recent years, driven by higher metal prices. Output prices rose as a result, as companies sought to pass on higher costs.

Sian Jones, Economist at IHS Markit, commented that, “April PMI data signalled a continuation of the strong growth seen in the first quarter of 2017. Further expansions in output and new orders are consistent with IHS Markit forecasts of a 4.4% rise in industrial production during 2017. Export order growth was at its strongest since January 2015 despite a strengthened currency following the koruna cap being lifted. Results for May will give a better idea of how the end of exchange rate adjustments has affected export performance.”

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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