Czech Republic PMI February 2017

Czech Republic

Czech Republic: Manufacturing PMI jumps in February

March 1, 2017

The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit rose from January’s 55.7 to 57.6 in February, marking a multi-year high. The indicator therefore moved further above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

February’s increase reflected faster growth in production, new orders and job creation. Output growth accelerated from the previous month and recorded the fastest pace since May 2014 on the back of a stronger inflow of new orders. On the external front, new export orders continued to grow, especially from the German market. The rate of job creation picked up, and achieved the strongest expansion since the summer of 2015. In spite of this, backlogs of work rose as capacity remained unable to cater to the strong increase in demand, and manufacturers’ purchasing activity also grew. Regarding price developments, output prices grew at the fastest pace in almost six years, as companies passed on higher input prices, especially for metals and oil-related items.

Paul Smith, Senior Economist at IHS Markit, comments that,

“February’s PMI data cemented the view from January’s release that Czech manufacturers have made an impressive start to 2017. The upturn has accelerated in each of the first two months of the year, with the latest improvement in business conditions the steepest since April 2011. […] With future expectations also remaining elevated, the data suggest that manufacturing will make a solid contribution to first quarter GDP, which is hoped to pick up from the disappointing growth performance seen throughout the second half of 2016.”

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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Czech Republic PMI Chart

Czech Republic PMI February 2017

Note: IHS 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: IHS Markit.

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