Czech Republic PMI January 2016

Czech Republic

Czech Republic: Manufacturing PMI starts 2016 on solid footing

February 1, 2016

In January, the manufacturing Purchasing Managers’ Index (PMI), elaborated by Markit, rose from December’s 55.6 to 56.9. The reading represents a third increase in a row and a six-month high. As a result, the manufacturing PMI remained above the 50-long-term average that indicates expansion in the manufacturing sector, where it has been since May 2013.

January’s improvement mainly reflects that output, new orders and employment all gained ground, recording the fastest expansions since July 2015. In addition, enterprises increased purchasing activity and ordered higher volumes of inputs to prepare for the expected rise in workloads. Outstanding work reached the highest reading in over four years, pointing to capacity pressures. Regarding prices developments, input costs recorded a steep drop, mainly due to lower price for oil and metal. Output charges fell for a third consecutive month, as firms to some extent passed on lower input costs to clients.

Markit commented that, “Czech manufacturers enjoyed a strong start to 2016, registering the sharpest overall growth in six months. Moreover, the acceleration in January contrasted with slowing manufacturing growth in the Eurozone, according to the flash PMI released on 22 January. Output data for the past two months suggests that calendar-adjusted year-on-year growth of IP will rebound from November’s recent low.”

FocusEconomics Consensus Forecast participants see fixed investment increasing 3.4% in 2016, which is unchanged from last month’s projection. For 2017, panelists expect fixed investment to expand 3.7%.

Author: Teresa Kersting, Economist

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Czech Republic PMI Chart

Czech Republic PMI January 2016

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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