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Czech Republic PMI July 2018

Czech Republic: Manufacturing PMI drops to near one-year low in July

The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit fell from 56.8 in June to 55.4 in July, an 11-month low. Nonetheless, the PMI remained firmly above the critical 50-point mark separating expansion from contraction in activity in the manufacturing sector.

July’s dip reflected slower growth in output, new business orders and job creation. Both production and new orders growth moderated to 11-month lows; nonetheless, their pace of expansion remained robust. As production outpaced new orders growth, backlogs of work rose at the slowest clip in over a year and a half. In addition, the rate of employment growth eased from June, reportedly due to ongoing labor shortages. On the price front, input inflation accelerated to an eight-month high, largely due to higher capacity pressures on suppliers and increased global demand for inputs. Despite firms passing only part of these higher costs onto customers, output inflation remained elevated and well above its long-term trend. Lastly, optimism among firms remained upbeat in July, fueled by greater access to new markets.

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