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March Czech Republic manufacturing dips to six-month low

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Staff Writer |
Czech Republic manufacturing
Czech Republic   IHS Markit Czech Republic Manufacturing PMI

The latest PMI survey data from IHS Markit indicated a steep expansion across the Czech manufacturing sector in March.

Overall growth was supported by sharp increases in both output and new orders, despite the rates of expansion easing to five- and seven-month lows respectively.

In contrast, new export orders increased at a faster pace.

Meanwhile, input cost inflation accelerated to the quickest since last November and growth in selling prices remained steep.

Business confidence also rose and was the second-highest since January 2017.

The headline IHS Markit Czech Republic Manufacturing PMI is a composite single-figure measure of manufacturing performance.

It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

Any figure greater than 50.0 indicates overall improvement in the sector.

At 57.3, down from 58.8 in February, the latest PMI reading indicated a sharp improvement in operating conditions across the Czech manufacturing sector, albeit the slowest since last September.

Moreover, the first quarterly average for 2018 was only down slightly from that seen at the end of 2017.

In line with greater global demand, output levels at Czech goods producers increased further in March.

Although the rate of growth softened slightly to a five-month low, it remained sharp overall.

Moreover, the quarterly average was the strongest since the first quarter of 2011.

Similarly, the latest expansion in new orders was steep, but the slowest in seven months.

The upturn was attributed to increased client demand, especially from those in the construction and automotive industries.

Furthermore, growth in new business from abroad accelerated and was strong overall.

On the price front, cost burdens faced by Czech manufacturing firms continued to rise at a marked pace in March, driven by greater raw material prices.

Moreover, the pace of inflation accelerated to a four-month high.

Meanwhile, supplier delivery times lengthened further, with performance deteriorating to the greatest extent since October 2017.

March survey data signalled a steep rise in factory gate charges.

The rate of inflation was the second-fastest since April 2011 (behind February’s multiyear peak).

Higher raw material prices reportedly drove the latest increase in output charges.

Amid ongoing labour shortages, employment growth eased to a six-month low in March.

Although job creation was strong overall, some firms were unable to find suitable candidates to fill all available positions.

In line with greater client demand and strains on capacity, the level of outstanding business increased at the fastest pace since last December.

Expectations towards the year-ahead outlook for output increased to the second-highest since January 2017 in March.


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