PRAGUE, Nov 1 (Reuters) - The Czech Purchasing Managers'
Index (PMI) dipped in October from a three-month high, falling
to 57.2 but holding above the breakeven point for a 12th
straight month.
Markit Economics data showed on Monday the index fell to its
lowest level since July after hitting 58.0 in September, while
the output component dropped to its lowest level since May but
still showed expansion.
New orders stayed above the mid-point 50 that divides growth
from contraction for a 15th month running. However, new export
business showed its slowest pace of growth this year.
The index signalled the fastest rate of job creation since
March 2007.
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KEY POINTS: 10/10 09/10 10/09
Purchasing Managers' Index 57.2 58.0 49.8
Output 58.8 59.8 52.0
(For table, double click on......................[]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
MARKET REACTION:
The Czech crown <EURCZK=> edged up a touch to 24.610 to the
euro from 24.625 seen before the data.
COMMENTARY:
STANISLAVA PRAVDOVA, ANALYST, DANSKE BANK
"We had in fact expected the Czech PMI in October to
increase further so in that sense it was slightly disappointing
for us."
"Nonetheless, the Czech PMI is still well above the critical
50 level and is one of the highest in the CEE region so we would
not get overly worried about the drop in October."
"However, we must acknowledge that we might see the PMI
moderate further going forward as industrial production growth
begins to slow by the end of the year and going into the next
year. But overall the Czech industry should keep decent growth
going forward albeit at a much slower pace."
4CAST ANALYSTS
"(PMI) remained well above the 50 point borderline
signifying that industrial performance will remain strong."
"We remind that Skoda posted record sales figures in Sep as
exports to China soared. This month optimism continued to ride
mostly on expectations for sustained demand from abroad. There
has been no evidence so far that the stronger local currency is
hurting exports."
"Concerns for a potential slowdown in economic recovery
abroad have not materialised so far and the PMI figure comes in
line with the strong Ifo and ZEW readings in Germany as well as
with the fast rate of industrial production growth..."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"PMI remains on a relatively good level, so I would not take
the dip as a trend but rather a fluctuation... We still think
that the manufacturing industry will stay the main driver of the
Czech economy and this small correction will have no influence
on financial markets."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"It is true the value is somewhat lower than in the previous
month, but it is still very high when compared to the 50 percent
level."
"I think this drop will not have a marked impact."
"Perhaps the economic expansion will not be that fast, the
double-digit pace of growth in industrial production cannot last
for ever but it still points to a relatively fast expansion."
"In the coming month Czech PMI could accelerate again thanks
to the better-than-expected data coming from Germany in the
latest weeks."
MURAT ULGEN, HSBC CHIEF ECONOMIST, CENTRAL & EASTERN EUROPE
and SUB-SAHARAN AFRICA
"Manufacturing activity remains strong in the Czech Republic
in October, expanding for the twelfth month on the trot and at a
pace well above the historical average".
"However, there has been some moderation in growth as
compared to September, in line with trends seen elsewhere in the
region, and reflects modest deceleration in both actual output
as well as the new orders component".
"The latter in turn could primarily be explained by slower
new export order growth possibly on the back of Eurozone
weakness and koruna strength despite Germany's better than
expected performance".
"Overall, the picture remains one of strength however, with
healthy demand conditions being reflected in rising stocks of
purchases as well as longer suppliers' delivery times. Both
input and output prices continued to rise, suggesting a likely
build-up in pricing pressures going forward".
"Though the pace of increase in output prices was much
slower compared to that of input prices, possibly hinting at
margin squeeze in the manufacturing sector. Labour market
conditions improved further as well, with the employment
component rising back to levels just below the pre-crisis
highs."
BACKGROUND:
- Report on last Czech c.bank rate decision......[]
[] [] []
- August foreign trade figures...................[]
- August industrial output.......................[]
- Second-quarter preliminary 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>
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Detailed PMI data are only available under licence from
Markit and customers need to apply to Markit for a licence. For
further information please phone Markit on ++ 44 20 7260 2454.
(Reporting by Mirka Krufova and Jason Hovet)
