Czech manufacturing conditions continue to lose momentum; PMI at three-year low in June

Manufacturing business conditions in the Czech Republic continued to lose momentum in June, showed the latest PMI survey data.

The headline Markit Czech Republic Manufacturing PMI dropped to 51.8 in June from May’s 53.3. The index continued to stay above the no-change mark of 50 in the month, hinting at an overall rebound in manufacturing business conditions. But the index fell for the fifth consecutive month and was at a three-year low and lower than the long-run survey average of 52.9. All the five subcomponents registered downward movement in June.

Last month, manufacturing new orders grew slowest since November 2015. Moreover, the growth rate was the third-weakest in the 37th consecutive month of expansion. Overall, new business from exports markets grew slower, but companies recorded demand from important neighbouring markets such as Slovakia, Germany and Poland.

Manufacturing output in the country grew in June, continuing with the expansion sequence that started in April 2013. However, the growth pace decelerated to the weakest in more than three years. Moreover, backlogs of work kept on increasing, albeit at a marginal rate.

Meanwhile, producers continued to increase their workforce in the month of June; however, the pace of job creation was the softest since February 2014. In June, output requirements continued to be underpinned by purchasing activity; however, the expansion pace was slowest in the 35-month phase of growth. Therefore, inputs' stocks dropped for the first time since December 2014.

For the second consecutive month, input prices grow in June. The rise is attributed to the growing prices of plastics and metals. But, the inflation rate was just marginal. In the mean time, prices for finished goods increased for the first time in six months; however, at a marginal rate, noted Markit.