INSTANT VIEW 2-Czech May PMI remained strong

...year.  
 
KEY POINTS: 
                                  MAY 07   APRIL 07    MAY 06 
 Purchasing Managers' Index        55.8       56.1      56.4 
 Output                            58.3       56.6      58.7 
 New orders                        56.5       56.5      58.8 
 
 (Full table of data...............................[nPRA001321]) 
 
- A figure above 50 indicates expansion on the previous month 
while a number below 50 signals contraction. 
- The headline index has held above the neutral mark of 50.0 
since March 2003. 
- The headline figure from the survey designed to provide a 
single-figure snap-shot of the health of the manufacturing 
economy.  
- The index eases for the third month running in May from 
February's record 58.5. May is the lowest figure since last 
November but still points to strong overall growth of the 
sector, and the headline index remains comfortably above its 
long-run average of 53.9. 
- Growth of output increased at the fastest rate for three 
months in May. Average output has now risen for 56 successive 
months.  
- Higher output levels were most commonly linked to large 
contracts secured during the month and increased plant capacity. 
- New export orders continue to increase at a strong rate in 
May. The seasonally adjusted index posted 56.4 from 57.4 in 
April. The current period of continuous expansion in new export 
orders now reaches two years. 
- Input prices indicate the highest rate of input cost inflation 
for three months in May. The seasonally adjusted index rises to 
59.5 from 58.0 in April, registering a steep increase in prices 
paid for raw materials and a twenty-second consecutive month of 
inflation. 
- Data released by NTC Research and ABN Amro. 
 
COMMENTARY: 
    ZSOLT PAPP, ECONOMIST, ABN AMRO, LONDON 
    "A softer PMI figure for the third consecutive month could 
be interpreted as a sign of slowing momentum in Czech 
manufacturing.  
    "We believe, however, that growth remains well supported, as 
highlighted by the higher figures for output and robust new 
orders.  
    "Figures for employment and stocks of finished goods also 
lend support to our view that manufacturing has corrected from 
probably unsustainable heights earlier this year and that 
underlying trend remains solid." 
     
MARKET REACTION: 
-Czech crown shrugs off data trading little changed to the euro 
at 28.328 . 
 
BACKGROUND: 
- Report on most recent interest rate decision...[ID:nL31320495] 
                                 [ID:nPRA001319] [ID:nL31276683] 
- March foreign trade figures....................[ID:nL09284340] 
                                                 [ID:nL09606545] 
- March industrial output........................[ID:nL15302934] 
- Fourth-quarter GDP growth data.................[ID:nL09207856] 
 
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