Czech manufacturing business conditions stabilize in August

Manufacturing business conditions in the Czech Republic have broadly stabilized in August, based on the latest PMI survey, following a slight downturn recorded in July. Increasing output countered another fall in new orders, while employment continued to grow, albeit at a weaker pace. Manufacturers continued to be cautious with respect to purchasing activity that dropped further and led to another fall in input stocks.

The Manufacturing PMI rose to 50.1 in August from July’s 49.3. July’s figure had hinted at the first outright decline in the business climate since April 2013. The headline figure’s upward movement mostly showed rises in the output and new order indices. However, the latter still hinted at declining new work overall, noted Markit Economics.

Czech manufacturing output’s growth resumed in August, after falling for the first time in more than three years in July. However, the pace of growth was just marginal and quite lower than the long-run trend level since the survey began in June 2001. Production was up in August in spite of a further decline in the volume of new business received.

New orders decline for the second consecutive month, but the pace of decline decelerated from July’s 43-month record to a marginal pace, said Markit Economics. Meanwhile, new export contracts fell for the second consecutive month at a weaker pace. Backlogs of work rose a bit, after declining in July.

Employment in manufacturing continued to increase in August. But the pace of growth eased further to the weakest since June 2013. Companies were also cautious with regard to purchasing activity that dropped for the second straight month.