Czech Republic: Manufacturing sector contracts for the first time since July 2016
January 2, 2019
The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit slipped from 51.8 in November to 49.7 in December, the sixth consecutive monthly fall and the first contraction in over two years. Consequently, the index moved below the critical 50-point mark separating expansion from contraction in activity in the manufacturing sector.
December’s contraction reflected the first decline in output since July 2016 and the second consecutive contraction in new orders growth. New orders fell at the fastest pace in six years and were hit by a particularly sharp decline in export orders—the steepest in nearly a decade—negatively affected by ongoing trade wars. On the price front, input costs continued to rise notably, although the pace of increase was the slowest in 16 months. Consequently, output charge inflation moderated to an almost one-and-a-half-year low, primarily due to the overall deterioration in demand conditions. Lastly, optimism among manufacturers dropped to the second-lowest level in six years, due to concerns over future demand and global trade tensions.