Czech Republic: Manufacturing PMI moderates to six-month low in March
April 3, 2018
The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit dipped to 57.3 in March, down from 58.8 in the prior month. However, the PMI remained firmly above the critical 50-point mark separating expansion from contraction in the manufacturing sector; the result was driven by robust performances across all components of the index. Moreover, the average reading for the first quarter was only slightly down from that of the fourth quarter of last year, indicating a continuation of the strong momentum in the Czech economy.
In March there was robust growth in output and new orders, while new export orders picked up pace. Output levels expanded robustly thanks to increased global demand; however, the pace of expansion eased to a five-month low. Growth in new orders remained resilient despite moderating to a seven-month low. Nonetheless, the still strong expansion in new orders was due to increased client demand, especially from the construction and automotive sectors. Looking at prices, input price inflation increased markedly as raw material prices picked up. Due to higher input prices, output prices continued to increase.
Employment growth eased to a six-month low partly due to an ongoing shortage of labor. Despite the increase in payrolls, backlogs of work continued to increase, driven by strong client demand. However, business confidence remained elevated in March.
Author: Jan Lammersen, Economist