William Malcolm

Czech Manufacturing Loses Momentum In July

Conditions in the Czech manufacturing sector continued to improve in July, however, the PMI index fell slightly to 62 points from 62.7 points in June. Even so, this is the second-best figure since the start of data collection in June 2001. IHS Markit reported. The level of 50 points in the index is the divide between growth and decline.

“The Czech manufacturing sector lost momentum in July, but its expansion was still robust. The survey suggested that output growth may have peaked at the end of the second quarter, but was still strong, despite the unprecedented disruption of supply chains and material shortages. “IHS economist Markit Sian Jones said.

According to a survey in July, the disruption of customer-supply chains led to an increase in input prices to a new record. “Suppliers’ performance has deteriorated the most in the survey’s history due to strong global demand for inputs and significant material shortages. Suppliers have subsequently increased their prices,” said IHS Markit. In addition, according to the survey, the vast majority of processors in July passed on a higher price burden to customers. The rate of increase in output prices was thus the fastest since the start of data collection in January 2003, IHS Markit pointed out.

“The wave of recovery in European industry continues, which is also beneficial in the domestic manufacturing sector, which is also helped by growing domestic demand. Complications in the supply of raw materials and necessary parts lead to production delays, which has a negative impact on exports , as indicated by the preliminary data on the development of the Czech Republic ‘s GDP in the second quarter of this year, “said Radomír Jáč, chief economist of Generali Investments CEE.

According to Raiffeisenbank analyst David Vagenknecht, the result of the PMI index is underlined by reports from the industry, where Škoda Auto and other carmakers were forced to partially reduce production due to missing materials. “Currently, there is considerable uncertainty about how long complications in supply chains will persist. However, the opening of domestic and foreign economies should have a stabilizing effect,” he said.