Czech Republic: Manufacturing PMI signals expansion in August but momentum could fade in Q3
September 1, 2017
The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit decreased from July’s reading of 55.3 points to 54.9 points in August, the lowest level so far in 2017. Nevertheless, the indicator remains comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.
August’s reading largely reflected a slower increase in new orders received by Czech manufacturers, which contributed to a moderation in output growth. Against this backdrop, manufacturers reduced the pace of job creation. Average delivery times recorded their greatest increase since February 2011 on the back of higher purchasing activity by goods producers. In conjunction with the rise in average delivery times, growth in input prices rose for the first time in five months. New export sales increased at a faster rate in August, supported by healthy demand from Germany and the U.S.
Paul Smith, Principal Economist at IHS Markit, succinctly summed up the picture in August, stating that, “After a strong first half of the year, the Czech manufacturing sector looks to have lost some momentum in the third quarter.”
Looking ahead, manufacturers were more confident in August about output levels over the next 12 months, with confidence rising from July’s seven-month low. This optimism stems from expectations of new export opportunities, planned investments and new technologies.
Author: Edward Gardner, Economist