Czech manufacturing performed the worst in 33 months in May as new orders declined at the fastest pace in almost three years, an industry gauge showed.
The HSBC Czech Republic Manufacturing PMI fell to 47.6, the lowest since August 2009, from 49.7 in April, the bank said today in an e-mailed report. A result greater than 50 signals improvement in manufacturing performance, while a figure below signals a worsening.
Gross domestic product unexpectedly fell 1 percent in the first three months of 2012 from the final quarter of 2011, preliminary data showed, as the state cut spending to narrow the fiscal deficit to less than the European Union’s limit of 3 percent of GDP next year. The economy relies on demand for cars, auto parts and electronics goods from the EU, which buys about 80 percent of Czech exports.
“It is hard to beat the bad news conveyed by a much deeper than expected GDP contraction in the first quarter of this year and in this sense, the weakening PMI comes as no surprise,” Agata Urbanska, an economist at HSBC Bank Plc in London, said in the release. “But the PMI index still points to downside risks in the coming quarters.”
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