Czech Republic PMI

Czech Republic

Czech Republic: Manufacturing PMI recedes in August from July's over-four-year high; remains in expansionary territory

September 2, 2015

In August, the manufacturing Purchasing Managers’ Index (PMI), elaborated by Markit, moderated from July’s 57.5, which had represented the highest reading since April 2011, to 56.6. Nevertheless, the manufacturing PMI remained comfortable above the 50-threshold that indicates expansion, where it has been since May 2013.

August’s slight setback reflects weaker growth rates for output, new orders and employment. However, Markit pointed out that despite August’s moderation, the aforementioned categories still recorded healthy expansions above their respective long-term averages. In addition, backlogs of work continued to rise and suppliers’ delivery times recorded a notable increase in August, highlighting the existence of capacity constraints. Inflationary pressures decreased in August as both input and output prices rose at a softer pace than in July.

Markit commented that, “the Czech manufacturing sector continued its strong start to the second half of the year in August. Data for the first two months of the third quarter are pointing to the sharpest growth since Q1 2011. There was also evidence of capacity constraints, despite a further round of strong job creation. Meanwhile, inflationary pressures remain in check, with input cost inflation falling to a five-month low and firms’ charges barely rising over the month.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 4.7% in 2015, which is up 0.5 percentage points from last month’s projection. For 2016, panelists expect fixed investment to expand 3.6%.

Author: Teresa Kersting, Economist

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Czech Republic PMI Chart

Czech Republic PMI August 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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