PRAGUE, Dec 12 (Reuters) - The gathering global economic
crisis hammered Czech industrial output in October, causing it
to fall 7.6 percent on an annual basis for the worst result in
almost eight years, the statistics office said on Friday.
It was much lower than market forecasts for growth of 0.3
percent. Analysts said it was caused mainly by a collapse in
demand from western Europe and that it added to an increasingly
bleak outlook for the industry-heavy Czech economy.
On Friday, Volkswagen's <VOWG.DE> Czech unit Skoda Auto said
it would halt work on Fridays in the first half of 2009 due to
significant drop in demand. And earlier this week, auto industry
officials said they expected over 13,500 job cuts in the sector.
The Czech crown <EURCZK=> dropped to a seven-week low
following the data, trading at 26.00 per euro, from 25.93 before
the numbers were released.
****************************************************************
KEY POINTS:
(y/y change in pct) Oct Sept Sept forecast
Industrial output -7.6 8.9 (9.6) 0.3
Industrial sales -7.9 8.3 (8.9) n/a
(Full table of data............................[])
- The figure was the worst since the statistics office began its
current data archive on industry in January, 2001, the office
said.
- Seasonally adjusted output was down 8.7 percent
month-on-month.
- Seasonally adjusted output was down 6.1 percent year-on-year.
- Overall new orders fell 24.2 percent year-on-year, and new
orders from abroad decreased 20.1 percent.
COMMENTS
PAVEL MERTLIK, CHIEF ANALYST, RAIFFEISENBANK
"The October industrial output has shocked everyone."
"Apart from the Skoda <VOWG.DE> outage at the end of
October, the drop was led also by other engineering sectors and
even the food industry."
"The statistical picture of the Czech industry has caught up
with western peers, hit by a global sales crisis."
PETR DUFEK, ANALYST, CSOB
"It is the worst result since 2002, caused mainly by a 15
percent drop in automotive industry."
"It is definitely a bad result that shows that a recession
in the European economy has begun to impact the Czech economy in
full strength."
"Inflation is gone, industrial prices are falling too;
production is falling, and the outlook certainly shows no light
at the end of the tunnel."
"It is time to interest rates again, and not only once."
"Today's result indicates that fourth quarter GDP will be
pretty miserable."
JAN VEJMELEK, HEAD OF RESEARCH, KOMERCNI BANKA
"Recession in the industrial sector has already reached the
Czech Republic. Our outlooks show industrial output should
decline through the whole fourth quarter and the majority of
2009."
"The reason is obvious -- a recession in the euro zone and a
dramatic drop in foreign demand for Czech exports."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"With exports falling 10 percent, it was not possible to
expect an increase in industrial output. The number is negative
and clearly shows the recession in the euro zone is impacting
the Czech economy faster and more strongly than expected so
far."
"This has implications for monetary policy; cutting interest
rates by at least 50 basis points next week and a further quick
reduction in rates."
"As for the fiscal policy, it is necessary to prepare, as
quickly as possible, some stimulus that would help both export
firms and the Czech economy in general."
BACKGROUND:
- October foreign trade figures...................[]
- Report on last Czech c.bank rate decision........[]
[] [] []
LINKS:
- For further details on October output and sales numbers and
past data, Reuters 3000 Xtra users can click on the Czech
Statistical Bureau's Website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-pru
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Reporting by Jana Mlcochova; Editing by Michael Winfrey)
