INSTANT VIEW 1-Czech June PMI recovers from 6-month low

...survey's six-year history, recovering from a six-month 
low in May. 
 
KEY POINTS: 
                                  JUNE 07    MAY 07    JUNE 06 
 Purchasing Managers' Index        57.7       55.8      57.0 
 Output                            60.2       58.3      59.6 
 New orders                        59.0       56.5      60.0 
 
 (Full table of data...............................[nPRA001378]) 
 
- 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 index increased to 57.7 in June, the joint second-highest 
figure in the survey's six-year history, signalling strong 
overall growth of the sector. 
- Production levels increased at a rapid rate in June. Output 
rose to a four-month high of 60.2 from 58.3 in May, and has now 
been above the no-change mark of 50.0 for the past 57 months. 
- Anecdotal evidence from panellists widely linked higher 
production volumes to increased levels of new business, from 
both domestic and export markets. 
- New export orders rose for the first time in four months in 
June, to 59.0. That signalled the steepest increase in new 
orders in the Czech manufacturing sector since February. 
Moreover, the index was well above its long-run average of 56.4. 
- The latest data pointed to robust demand from both domestic 
and foreign markets, as new export order growth also accelerated 
since May. Firms reported that strong underlying demand had 
aided the successful launch of new projects during the month. 
- Input prices moved up for the second straight month from 
April's 12-month low in June, to 61.6. That signalled the 
fastest rate of input cost inflation in the Czech manufacturing 
sector since January. Metals including steel, copper and nickel 
were quoted by firms as being up in price since last month, as 
were plastics, timber and transport charges. 
- Output price inflation eased in June for the first time in 
three months but, at 55.3 still pointed to a strong increase in 
input costs. Czech manufacturers have, on average, raised their 
output prices for the past 18 months. 
- Staffing levels continued to increase in June, extending the 
current period of job creation to two years. 
- Data released by NTC Research and ABN Amro. 
 
    COMMENTARY: 
    ZSOLT PAPP, ECONOMIST, ABN AMRO, LONDON 
    "June PMI supports our view that momentum in Czech 
manufacturing remains strong, underpinned by output and new 
orders. On a positive note, output price inflation eased in 
June, but the rise in input costs suggests that this might be a 
temporary break only. Overall, the prospects for Czech 
manufacturing remain very positive in our opinion." 
 
    BACKGROUND: 
- Report on most recent interest rate decision...[ID:nL28398864] 
                                 [ID:nPRG000403] [ID:nL28546436] 
- April foreign trade figures....................[ID:nL06479683] 
- April industrial output........................[ID:nL12369927] 
- First-quarter GDP growth data..................[ID:nL08200685] 
                                                 [ID:nL08216043] 
 
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