PRAGUE, March 9 (Reuters) - Czech industry picked up speed
in January while consumer inflation slowed in February,
indicating modest recovery in a low-inflation environment that
will allow the central bank to keep rates flat into the second
half of the year.
Czech industrial output rose by 5.3 percent in January,
rising for the second straight month. Analysts had expected a
2.5 percent rise.
The annual growth was mainly thanks to low comparative base
and a higher production of machinery and cars. Seasonally and
working day adjusted data showed a month-on-month rise of 3.0
percent.
Officials and analysts expect rising global trade to help
the Czech economy to a modest recovery this year after an
estimated 4.3 percent contraction in 2009.
Consumer prices were flat in February from January, putting
year-on-year inflation at 0.6 percent, down from 0.7 percent in
the previous month and below analyst's forecast of 0.8 percent
rise.
The central bank cut interest rates to a record low of 1
percent last year to boost the economy. Analysts expect the bank
to start tightening policy in the second half of the year.
****************************************************************
KEY POINTS:
INDUSTRIAL OUTPUT
(y/y change in pct) Jan Dec Jan forecast
Industrial output 5.3 (1.8) 2.5
Industrial sales 0.3 (-0.8) n/a
CONSUMER INFLATION
(pct change) Feb Jan Feb forecast
month/month 0.0 1.2 0.2
year/year 0.6 0.7 0.8
AVERAGE WAGES Q4/09 Q3/09
Monthly wage (nominal) 25,752 23,319
real change y/y (pct) 4.8 4.6
nominal change y/y 5.2 4.7
Details of January industrial output............[]
Details of February inflation ..................[]
Details of Q4 avg wage .........................[]
CENTRAL BANK FORECAST:
The central bank saw in its last quarterly forecast February
annual inflation at 0.9 percent, while analysts in a Reuters
poll saw it at 0.8 percent.
The bank cut interest rates to a record low of 1.00 percent
on December 16, and has held rates at this level in its last
policy meetings.
DETAILS ON INDUSTRIAL OUTPUT:
- Overall new orders rose 3.7 percent year-on-year, and new
orders from abroad increased by 6.8 percent.
- Orders in the vehicle making sector rose by 33.8 percent.
- Construction output, measured by a separate index, dipped 5.6
percent year-on-year in January.
DETAILS ON CPI:
- The monthly consumer price stagnation was mainly due to a rise
in food prices, mainly vegetables and potatoes, and alcoholic
beverages.
DETAILS ON WAGES:
- Real wages in the private sector rose by 5.2 percent
year-on-year in the fourth quarter; real wages in the public
sector rose by 4.5 percent from the previous quarter.
- Gross average monthly wages in the fourth quarter stood at
25,752 crowns ($4,660).
COMMENTARY:
MIROSLAV FRAYER, ANALYST, KOMERCNI BANKA
"Industrial production figures are quite positive, the
growth was quite strong...but it was also affected by a low
comparative basis."
"These figures are very much affected by the car industry,
so maybe we will see some slowdown due to a slowdown in this
sector...at the beginning of this year.
"Overall for the year we expect an increase of more than 5
percent mainly due to the low comparative base, and it will
depend mainly on external demand and recovery in the euro zone."
ERIK GEUSS, DEPUTY INDUSTRY MINISTER
"Positive news for Czech industry is that after 14 months of
contraction, the growth in December was confirmed and we
registered growth in January. This positive development also
suggests an improving mood in the business sphere in the Czech
Republic and the euro zone."
"Despite the result in industrial production we must be
careful not to exaggerate expectations. For example, car sales
for January were affected by the end of scrap subsidies in
Germany."
PETR DUFEK, ANALYST, CSOB
"February inflation turned much better than expected."
"Food and tourism grew moderately more expensive while
consumer goods (prices) went down."
"It is turning out that a weak consumer demand forces
retailers to cut prices and gives them only little room for a
seasonal rise in food prices."
"Tax hikes are not showing in the data very significantly
yet so we will see that in the coming months."
"Overall Czech inflation stays very low and is no cause for
the central bank to consider higher interest rates in the coming
half a year."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"The CPI is the most important for financial markets and it
is below consensus so there is no hurry to tighten policy."
"Industry is a clear disappointment... if you take into
account the (large) drop a year ago. I had originally expected 9
percent but less after yesterday's lower export data."
PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK
"The fast growth in wages is due to two factors: fast growth
in unemployment when companies prefer to fire people with lower
qualification and therefore a lower wage, and because December
was a period when companies paid out annual benefits."
"The data changes nothing about our outlook that wages would
grow very slowly in 2010."
MARKET REACTION:
Crown at 25.615 to the euro <EURCZK=> at 0834 GMT from
25.635 ahead of the data.
BACKGROUND:
- January foreign trade figures .................[]
- January producer prices figures ...............[]
- Report on last Czech c.bank rate decision......[]
[] [] []
LINKS:
- For further details on January industrial output, February
inflation, Q4 real wage 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>
(Writing by Jason Hovet)
