Czech Manufacturing Contraction Slows In July

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The Czech Republic’s manufacturing sector contracted at a slower pace in July, survey data from IHS Markit showed on Monday.

The headline manufacturing Purchasing Managers’ Index, or PMI, rose to 47.0 in July from 44.9 in June. The reading was the highest in 16 months.

Any reading below 50 indicates contraction in the sector.

Production increased for the first time since November 2018. New orders volumes decreased at the slowest pace in over a year-and-a-half in July.

The rate of contraction in new export orders eased in July and was the softest since February.

Business confidence increased in July and the degree of optimism reached the highest since October 2018.

The number of workforce continued to decline in July and the rate of job shedding was the lowest since February.

Cost pressure strengthened in July and the rate of input price inflation was the fastest since May 2019. The decline in selling prices was the slowest in the seven-month sequence.

“The Czech manufacturing PMI continued to move on an upward trajectory in July, despite registering a further decline in performance,” Sian Jones, economist at IHS Markit, said.

“Our latest forecast indicates a 10.4 percent contraction in industrial production in 2020 on the year, improving to a 6.7 percent expansion in 2021,” Jones said.

Firms expressed optimism once again in the outlook for the year ahead, amid hopes of a pick-up in demand, the economist added.

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