INSTANT VIEW 1-Czech Aug PMI dips from all-time high

...was still the second highest in over six years of 
data collection. 
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KEY POINTS: 
                                   AUG 07    JULY 07    AUG 06 
 Purchasing Managers' Index        58.8       59.5      56.9 
 Output                            61.2       61.8      59.4 
 New orders                        60.3       60.8      59.9 
 
 (Full table of data...............................[nPRA001471]) 
 
- 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. 
- Output remained high in August, falling only slightly from 
July's near three-year peak of 61.8, to 61.2. That pointed to a 
rapid growth of Czech manufacturing production that was well 
above the long-term average. 
- Panellists reported a further marked rise in new orders during 
the month had supported production growth. 
- New orders increased at a rate only slightly weaker than the 
record pace set in July. Firms reported that demand remained 
strong in both domestic and export markets. 
- New orders from export markets have risen for twenty-seven 
consecutive months, with the latest anecdotal evidence 
suggesting strong demand from clients in Russia and Eastern 
Europe in particular. 
- Input price inflation in the Czech manufacturing sector 
accelerated for the fourth month running in August. 
- Seasonally adjusted input prices edged up to 62.4, from 62.1 
in July, indicating the steepest rate of input cost inflation 
since January. Metals, energy and oil-related products such as 
plastics were all quoted as being up in price since one month 
earlier. 
- Output prices rose to 55.6 in August, from 54.6 in July, 
signalling a strong increase in average output prices charged by 
Czech manufacturers. Firms directly linked higher selling prices 
to increased raw material costs.  
- Staffing levels continued to increase at a strong rate in 
August. The index dipped slightly to 55.8, from 56.3 in July, 
but was nevertheless above the average for the past year. The 
current period of job creation in the sector has now extended to 
twenty-six months. 
- Firms increased workforce and purchasing volumes in August to 
help deal with rising levels of new business and higher 
backlogs. Employment growth was robust and well above the 
long-run survey average. 
- Data released by NTC Research and ABN Amro. 
 
COMMENTARY: 
    ZSOLT PAPP, ECONOMIST, ABN AMRO, LONDON 
    "Another set of strong PMI figures in August underline the 
vigorous performance of the Czech manufacturing sector and  
export industry. 
    However, this is accompanied by rising input and output 
costs, which eventually feed into headline inflation. In this 
context, August PMI data lend support to the case for further 
monetary tightening, in our opinion." 
 
BACKGROUND: 
- Report on most recent interest rate decision...[ID:nL30781459] 
                                                  [ID:nL3044281] 
- June foreign trade figures.....................[ID:nL07596428] 
- June industrial output.........................[ID:nL13698020] 
- First-quarter GDP growth data..................[ID:nL08200685] 
                                                 [ID:nL08216043] 
 
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