Czech Republic PMI August 2016

Czech Republic

Czech Republic: Manufacturing PMI returns to expansionary territory in August

September 1, 2016

The manufacturing Purchasing Managers’ Index (PMI)—elaborated by IHS Markit—rose from July’s 49.3 to 50.1 in August. This brings it back above the 50-point threshold which separates expansion from contraction in the manufacturing sector, after it had entered contractionary territory in July for the first time since April 2013.

The upward movement of the index was mainly due to the rise in output, while new orders fell for the second month in a row, albeit at a slower rate. New exports also contracted, but the rate of decline was weaker compared to the previous month. While purchasing activity and both pre- and post-production inventories also contracted, employment continued to increase but at the weakest rate since June 2013.

Trevor Balchin, Senior Economist at IHS Markit, commented that, “the recovery in the Czech PMI in August was encouraging, but the latest figure merely signalled an overall stabilization in conditions as opposed to an outright improvement. Although output and employment rose, new orders fell further linked to weaker export demand. Moreover, the increase in workforces was the slowest since June 2013. Given the new orders component remains negative, it is unclear whether the rebound in the PMI will be sustained in September.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 0.4% in 2016, which is unchanged from last month’s projection. For 2017, panelists expect fixed investment to expand 3.1%.

Author: Massimo Bassetti, Economist

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Czech Republic PMI Chart

Czech Republic PMI August 2016 0

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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