Conditions in Czech industry have continued to deteriorate, according to the June Purchasing Managers’ Index (PMI). The PMI indicator dropped from 46.6 in May to 45.9- the lowest level in the last 10 years
Respondents to the IHS/Markit survey suggest that the decline in the indicator was due to lower production, where the rate of contraction was the highest since December 2012, and a significant decline in new orders, where the decline was the steepest since May 2009. The fall in new orders was due to unexpected shutdowns in automakers. Input costs continued to rise, albeit less than in May; some firms managed to pass costs on to customers, but some also had to start lowering their prices due to weaker demand.
The Czech PMI suggests that domestic industry remains quite fragile. To a large extent, this follows developments abroad; Germany’s manufacturing PMI fell below the key 50-level in January and has remained there ever since. Respondents cite poor demand from the automotive industry and trade wars.