Czech Manufacturing Sector Growth Accelerates In June

Conditions in the Czech manufacturing sector continued to improve in June, with the PMI Purchasing Managers’ Index rising to 62.7 points from 61.8 points in May. The improvement was strongest since the start of data collection in June 2001. IHS Markit reports. The level of 50 points in the index is the divide between growth and decline.

“Improvements in operating conditions across the manufacturing sector have been strongest in the survey’s history,” IHS reports.

Production growth during June was robust and was the fastest since February 2018. This significant increase was associated with stronger customer demand and the easing of restrictions on covid-19, the company added.

Significant disruption of supply chains, meanwhile, continued to reduce production capacity and put pressure on input prices. Work in progress has grown the fastest since January 2011, despite a faster increase in employment. The financial burden was the highest in the history of the survey and many companies became more expensive to transfer part of the larger expenses to customers. This has led to the sharpest increase in output prices since January 2003.

Employment also increased again, but problems with recruitment thwarted efforts to prevent the growth of work in progress. Work-in-progress volumes grew the fastest in more than a decade, while capacity pressures continued to increase due to supply shortages. Longer deliveries, uncertainty in supply and efforts to build up security stocks have led to the fastest increase in purchasing activity since the beginning of 2007.

The release of anti-pandemic measures and the growth of confidence in the future have a positive effect on activity, problems in supply chains are likely to persist in the second half of the year, and improvements could take place next year. Of course, the future development is still very uncertain, however, this year’s performance of the industry could reach 11 percent, given the current development and the decline of the epidemic, analysts estimated.