PRAGUE, July 31 (Reuters) - Czech industrial output dropped
by a much less-than-expected 12.3 percent year-on-year in June,
slowing from a 22.0 percent fall in May, the Czech Statistical
Bureau (CSU) said in a flash estimate on Friday.
Analysts had forecast a 17.0 percent annual fall in June. It
was the mildest fall since March, when industry contracted by
12.2 percent.
They said the data may indicate the contraction in the Czech
economy had bottomed out at the end of the second quarter and it
could potentially influence the central bank to keep interest
rates on hold at its Aug. 6 policy meeting.
The CSU, which started providing a flash estimate on
production in April, said the data included 77 percent of
industrial output respondents, representing 84 percent of the
standard survey sample in total revenues.
The statistics office will release full details on August
11.
****************************************************************
KEY POINTS:
(y/y change in pct) June May June forecast
Industrial output -12.3 -22.0 -17.0
(For table of June data click on...............[])
- Seasonally adjusted output was estimated to be down 14.4
percent year-on-year.
- Industrial sales fell 14.3 percent annually in current prices
in June.
- The value of new orders dropped 13 percent year-on-year in
June, of which foreign orders fell 8.6 percent.
MARKET REACTION
The Czech crown was virtually unchanged at 25.55/58 per euro
following the data.
COMMENT
JIRI SKOP, ANALYST, KOMERCNI BANKA
"This figure is positive. The PMI data has been showing
improvement for several months but real data were lagging, so
this is the first sign (of improvement in real data).
"This can impact (the central bank from further cutting
rates at its Aug. 6 meeting) because some board members were
talking about soft data showing improvement but real data were
lagging. But this looks like real data are improving... I think
they will keep rates on hold, but it will be tight."
LUKAS MOKRAS, ANALYST, CESKA SPORITELNA
"It is a positive surprise because we were expecting an even
worse figure than the overall market consensus. It could be a
sign of stabilisation, as it is not only the Czech Republic but
there are some positive signs from the markets important for
export. I would say that this it is a trend towards improvement
rather than some swing."
"I do not expect a significant market reaction, I think,
especially concerning the crown, influences from the world
prevail, the risk aversion etc."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"It looks like the slump is finally at the end of the second
quarter; the worst could be behind us."
"This could be closely connected to May industrial data in
Germany and France. Germany is definitely the most important
trading partner for the Czech economy. We can see also the slump
in foreign orders is now below 10 percent."
"I would expect that the fiscal stimulus provided in some
euro zone countries -- especially the car scrapping subsidies --
is helping the Czech economy bottom out."
LINKS:
- For further information on June special preliminary releases
on industry data, Reuters 3000 Xtra users can click on the Czech
Statistical Bureau's Website:
http://www.czso.cz/eng/redakce.nsf/i/home
- 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 Jason Hovet; Editing by Michael Winfrey)
