Bloomberg News

Czech Manufacturing Deteriorated for Third Month in June

July 02, 2012

Czech manufacturing performance worsened for a third month in June as the euro area’s sovereign debt crisis continued to curb export orders, an industry gauge showed.

The HSBC Czech Republic Manufacturing PMI rose to 49.4, from a 33-month low of 47.6 in May, 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 deterioration.

“Linked to the ongoing crisis and uncertainty in western European markets, new export business in the Czech manufacturing sector fell for the eighth month running in June,” the bank said in the report, compiled by Markit, a financial information services company. “The rate of decline eased, but the current sequence is the second-longest in the survey history.”

Gross domestic product fell 0.8 percent in the first quarter from the final three months of 2011, the second contraction in as many quarters, as domestic demand dropped amid government austerity and uncertainty over Europe’s economic future. The economy relies on demand for cars, auto parts and electronics goods from the European Union, which buys about 80 percent of Czech exports.

The central bank in Prague last week cut the benchmark interest rate to a record low 0.5 percent, half a percentage- point below the European Central Bank’s main rate, saying the government’s plan to introduce more austerity measures will further depress consumer demand and tame inflationary pressures.

New orders fell at a slower rate in June, compared with May, while production was “broadly” unchanged and companies increased workforce after cutting staff in the previous month, HSBC said in the PMI statement.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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