Czech Republic PMI

Czech Republic

Czech Republic: Manufacturing PMI drops in October; remains in expansionary territory

November 2, 2015

In October, the manufacturing Purchasing Managers’ Index (PMI), elaborated by Markit, fell from September’s 55.5 to 54.0, marking a 10-month low. The reading represents a third consecutive moderation after the PMI had reached an over-four-year high in July. Nevertheless, the manufacturing PMI remained above the 50-threshold that indicates expansion in the manufacturing sector, where it has been since May 2013.

October’s setback represents deteriorations in several of the index’s sub-categories. While new orders continued to expand, their pace of growth decelerated to the slowest in two years and new export business also moderated, recording the smallest gain in over two years. Adding to this, output growth softened in October, falling to the lowest value in this year. Backlogs of work and job creation continued to rise in October, albeit to a lesser extent. Growth of new purchases made by manufacturers decelerated notably as unsold stock and stocks of inputs both increased in October. Input prices and output charges both registered a moderate decline in October, mainly on the back of lower costs for raw materials.

Markit commented that, “the Czech manufacturing sector continued to lose momentum in October. The PMI has fallen by 3.5 points since July, the biggest combined drop since the 4.5 point fall seen over March-May 2012. The latest Output PMI data signal that the official IP growth rate will ease below 5% yr/yr in the coming months. Moreover, with new order growth slowing to a two-year low in the latest survey, the PMI Output Index may ease further from October’s 2015 low in November.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 5.9% in 2015, which is up 0.3 percentage points from last month’s projection. For 2016, panelists expect fixed investment to expand 3.7%, which is up 0.2 percentage points from last month’s estimate.

Author: Teresa Kersting, Economist

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Czech Republic PMI Chart

Czech Republic PMI October 2015

Note: Markit Manufacturing Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Markit.

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