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PRAGUE, Nov 2 (Reuters) - Czech manufacturing crept closer
to recovery in October with an increase in production and new
orders but failed to breach the break even point as firms cut
prices to boost sales, data showed on Monday.
Manufacturing PMI crept up to 49.8, from 49.5 in September,
staying below the neutral 50 mark that demarcates the border
between a rise and a fall for the 16th straight month, the HSBC
Czech Purchasing Managers' Index (PMI) showed.
Production in the Czech manufacturing sector rose for the
third month running in October. However, the rate of growth
eased slightly compared with September, signalled by a fall in
the output index, said Markit Economics, which presented the
data.
It was the first month-on-month dip in the index since it
plunged in December 2008. New orders remained above 50.0 for a
third successive month in October.
The latest PMI figure of 49.8 signalled the slowest rate of
decline since July 2008. The only two components with negative
influences on the headline figure were employment and stocks of
purchases.
The latest figure signalled a moderate rate of growth in new
work received by Czech manufacturers, only fractionally weaker
than September's 17-month high. The proportion of firms citing
higher new orders was more than one-and-a-half times the share
that stated lower receipts of new business.
A repeat of October's marginal gain in November would see
the headline figure break the 50.0 mark for the first time since
June 2008, to signal an overall improvement of business
conditions in the sector, Markit said.
The crown <EURCZK=> strengthened to 26.465, from 26.523
before the data.
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KEY POINTS:
10/09 09/09 10/08
Purchasing Managers' Index 49.8 49.5 41.9
Output 52.0 53.6 40.3
(For table, double click on......................[]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
COMMENTARY:
JAROMIR SINDEL, CHIEF ECONOMIST, CITIBANK, PRAGUE
"There is a moderate improvement and it reflects what has
already been shown in the industry confidence indicator (from
the Czech statistics office) last week, and shows the pace of
the slowdown is moderating. But due to the car industry we will
see a slowdown in the entire industry."
"The overall industry was driven by the car industry. The
other sectors remain weak."
"If we get over 50.0 it will be only briefly. But we rather
expect (the index) will be close to the 50 level for a long
time."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"The good news is the index continued to rise, but the bad
news is the level of 50 was not breached. The overall picture
still seems to be mixed... Recovery of Czech industry seems to
be very gradual."
"So far I have registered no indication... that the recovery
is under risk. So I hope we can see 50 in PMI next month but
risk is still there."
KUBILAY OZTURK, ECONOMIST for EMERGING EUROPE at HSBC
"Business conditions in the Czech manufacturing sector
further approached recovery levels in October. The advance of
production and new orders, for the third consecutive month,
provides a further sign of a general recovery in demand
conditions.
The external environment also continues to be supportive as
new export orders increased for the second month running. A
deepening decline in output prices over the month suggests
deflation is a real possibility, increasing the chances of
further easing in monetary policy by year-end."
BACKGROUND:
- Report on last Czech c.bank rate decision.......[]
[] [] []
- August foreign trade figures....................[]
- August industrial output........................[]
[]
- September preliminary industrial output []
- Second-quarter GDP data........................ []
[]
LINKS:
- 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>
** Index copyright and database rights owned by Markit:
unlicensed copying strictly prohibited **
With immediate effect detailed PMI data are only available
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(Reporting by Mirka Krufova)
