INSTANT VIEW 4-Czech Nov output falls, defying flash estimate

                                
 PRAGUE, Jan 14 (Reuters) - Czech industrial output fell 0.1
percent year-on-year in November, final data showed on Thursday,
contradicting a preliminary estimate that had shown the first
growth in more than a year.
                                
 The November drop decelerated from a 7.2 percent
year-on-year fall in October and represented a seasonally
adjusted year-on-year drop of 2.5 percent, data showed on
Thursday.
                                
 While industrial output shows a gradual recovery, analysts
point to the still weak domestic economy, indicated by poor
retail sales data, confirming expectations that the recovery
slow. [ID:nLDE60C09G]
                                
 Seasonally adjusted output fell 0.3 percent month-on-month.
                                
 The annual drop was mainly due to a decline in the
production of machinery and metal products.
                                
 The smaller decline was mainly due to a low base effect from
the previous year, when output saw steep falls across emerging
Europe during the peak of the economic crisis. 
****************************************************************
KEY POINTS:

 (y/y change in pct)       Nov          Oct        Nov forecast
 Industrial output        -0.1          -7.2          1.3
 Industrial sales         -3.1         -11.4          n/a

 (Full table of data............................[ID:nPRA004921])
                                
 
                                
 MARKET REACTION: The crown <EURCZK=> remained little changed
following the data, trading at 26.09 per euro at 0832 GMT.
                                
 
                                
 DETAILS:
- Overall new orders rose 8.0 percent year-on-year, and new
orders from abroad increased by 11.0 percent.
- Orders in the vehicle making sector rose by 20.5 percent.
- Construction output, measures by a separate index, rose 7.8
percent year-on-year in November.
                                
 
                                
 COMMENTARY:
                                
 PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT PRAGUE
                                
 "Acceleration of wage growth to 7.5 percent year on year is
somewhat surprising. This is probably due to a huge drop in
employment."
                                
 "The data shows a gradual stabilisation in production and we
assume that December should confirm that. In December
electricity consumption grew, so December will probably be for
sure the first month of an annual growth after a long period."
                                
 HELENA HORSKA, ECONOMIC RESEARCH, RAIFFEISENBANK
                                
 "This number puts us among other European countries that
have not yet overcome last year's levels in industrial
production. Poland is in the best condition."
                                
 "The recovery will be shallow indeed."
                                
 
                                
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "The revision is rather marginal, the picture of the Czech
economy is not changing very much."
                                
 "It is turning out that while industry can gradually pull
itself out of a recession and have better results thanks to
foreign demand, yesterday's retail sales showed that domestic
demand is in a deep downturn."
                                
 "This shows that there is no need to move with interest
rates, which can remain at a bottom for a long time."
JAN VEJMELEK, HEAD OF ECONOMIC AND STRATEGY RESEARCH,
KOMERCNI BANKA
                                
 "It was revised down -- not significantly but below zero. It
was important that there was a month-on-month decline, so it
means the situation in the industrial sector is still not
favourable. I would say the only sector growing is car
production, which is still supported by fiscal measures abroad."
                                
 "I wouldn't expect significant change (ahead) in
year-on-year terms. I cannot rule out that we will see some rise
in year-on-year terms but it will only be due to a very low
base."
                                
 "I would still expect rather weak activity in months ahead.
Real improvement will depend on the revival of global exports,
especially in Germany. I think it is a question of the second
half of this year."
                                
 
                                
 PETR DUFEK, ANALYST, CSOB
                                
 "(The fall) is less than in previous months, although it's
due to the low comparative base."
                                
 "The November data was still affected by the scrap subsidy,
which raised car production by more than a fifth."
                                
 "The positive news is new orders. But we should not be
overly optimistic. Numbers in the following months will be
better but mainly due to the lower comparative base... The
recovery is still and still will continue to be fragile."

                                
 
BACKGROUND:
- November foreign trade figures..................[ID:nLDE60606U
- Report on last Czech c.bank rate decision.......[ID:nDE5BF128]
                                
[ID:nPRG003844] [ID:nDE5BF161] [ID:nPRA004895] [ID:nDE5BM155]

LINKS:
- For further details on November 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>
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- Czech forward money market rates                      <CZKFRA>

 (Reporting by Jana Mlcochova)