Czech Republic PMI March 2017

Czech Republic

Czech Republic: Manufacturing PMI signals strong growth in March

April 3, 2017

The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit decreased marginally from February’s 57.6 to 57.5 in March. The indicator therefore remained comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

March’s result reflected strong growth in production, new orders and job creation. Output growth was robust and only marginally weaker than in the previous month, which had marked the fastest pace of output growth since May 2014. Production growth was driven by another strong expansion in new orders. On the external front, new export orders continued to grow, especially from the German market, while the rate of job creation remained fast and was little-changed from February. Despite greater output and continued job creation, backlogs of work rose. Regarding price developments, input prices grew at the fastest pace in almost six years, with prices for metals and chemicals among the fastest growing. Consequently, companies passed on higher input prices, and output prices grew significantly.

Sian Jones, Economist at IHS Markit, commented that,

“PMI data for March signaled a continuation of the upturn seen in the first two months of 2017. […] Expectations for output in the next 12 months remained optimistic, with both domestic and foreign demand expected to increase further. Inflationary pressures in the manufacturing economy rose again in March with input prices growing sharply. This will be welcome news for the CNB, which has been working towards boosting inflation for many years.”

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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