Czech Republic PMI May 2018

Czech Republic

Czech Republic: Manufacturing PMI dips to a nine-month low in May

June 1, 2018

The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit dropped from 57.2 in April to 56.5 in May, a nine-month low. Nonetheless, the PMI remained firmly above the critical 50-point mark separating expansion from contraction in activity in the manufacturing sector.

May’s dip reflected slower growth in output, new business orders and job creation. Both production and new orders growth eased to nine-month lows; nonetheless, they remained robust by historical standards. Similarly, job creation grew at the softest clip since October 2016—partly reflecting increased labor shortages—but was solid overall. Meanwhile, some firms reported higher labor costs were squeezing profits. On the price front, input inflation eased somewhat but remained elevated, largely reflecting higher demand from firms amid supplier constraints and input shortages. Output inflation also moderated but remained above its long-term trend. Lastly, optimism among firms was strong in May, fueled by upbeat sentiment over future market conditions.

FocusEconomics Consensus Forecast participants see fixed investment increasing 5.9% in 2018, which is up 0.2 percentage points from last month’s projection. For 2019, panelists expect fixed investment to expand 4.2%.

Author:, Economist

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