** This data is protected by copyright - please see
<PMI/DISCLAIMER>. For further information on changes to
data provision, please see footnote to this news story ***
PRAGUE, July 1 (Reuters) - The Czech Purchasing Managers'
Index (PMI) inched up to a nine-month high in June but remained
below the critical 50 mark, indicating an 12th straight month of
decline, data showed on Wednesday.
The manufacturing PMI inched up to 41.9 from 40.5 in May and
a record low in January.
The Czech economy shrunk by 3.4 percent in the first quarter
from the previous three months but the PMI index has been rising
for five months in a row, prompting some analysts to believe the
economy was bottoming out.
Those hopes have however not been matched by production
data. A flesh estimate for May industrial output showed a
deeper-than-expected 21.7 percent year-on-year drop on Tuesday,
and new orders fell 27.6 percent.
The PMI figures showed that seasonally adjusted output moved
closer to the neutral level of 50.0. The pace of decline has
eased continuously since hitting a record last December.
Markit said the rate of decline in new orders also softened
in June, albeit to a lesser extent than in May.
Labour market conditions in manufacturing indicated a
further marked rate of job shedding in June. Employment has
declined every month since July 2008, in line with the trend for
output, Markit said.
****************************************************************
KEY POINTS:
06/09 05/09 06/08
Purchasing Managers' Index 41.9 40.5 50.7
Output 44.1 41.9 50.2
(For table, double click on......................[]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
COMMENTARY:
TREVOR BALCHIN, ECONOMIST AT MARKIT
"The PMI continued its ascent towards 50.0 in June, and over
the past three months has registered the best quarterly average
since Q3 2008. The picture of slowing decline in manufacturing
appears to justify the recent decision to hold the two-week repo
rate at 1.5 percent".
"However, the PMI data remain historically weak and still
point to a sharp overall rate of contraction. The performance of
the Eurozone in particular will be key to Czech manufacturers'
fortunes. The composite flash euro PMI showed only a modest rise
in June, remaining well below 50.0 and indicating that the
single currency bloc remains a source of weakness."
RAFFAELLA TENCONI, WOOD & CO, CHIEF ECONOMIST
"The growth was very contained and does fit my view that
because of the large exposure the Czech economy has to
exports... with the euro zone recovery being very slow and the
currency currently being strong, the pick up in exports has to
be very tamed in near term.
"It certainly says that there is a recovery going on but ...
it's going to be slow in the near term."
"The currency at this level is too strong, it's undermining
the recovery that's why I still expect a monetary loosening in
the near term."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"It is a slight relief that there is growth, but the rise is
not that big. And the level of PMI is below the levels of most
other countries that have already released (the data)."
"A moderation in the decline of industrial output is in the
pipeline. The only question is when exactly it will translate
into hard data. There is still a chance the flash industrial
data (for May) will be revised upward."
BACKGROUND:
- Report on last Czech c.bank rate decision.......[]
[] []
- April foreign trade figures.....................[]
[]
- May industrial output...........................[]
- First-quarter GDP growth data.................. []
[]
LINKS:
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
** Index copyright and database rights owned by Markit:
unlicensed copying strictly prohibited **
With immediate effect detailed PMI data are only available
under licence from Markit and customers need to apply to Markit
for a licence. For further information please phone Markit on ++
44 20 7260 2454
(Reporting by Mirka Krufova; Editing by Jan Lopatka)
