Wednesday, July 23, 2008

Czech Retail Sales May 2008

Seasonally adjusted retail sales rebounded slightly in May, growing by 0.6% month-on-month and by 2.5% year-on-year. Seasonally adjusted car sales increased by 0.7%, m-o-m, at constant prices, by 1.3% year-on-year and unadjusted (NSA) sales dropped by 1.5%. SA sales in hotels and restaurants increased by 0.2%, m-o-m, and NSA sales dropped by 0.3%, year-on-year.

The evidence for a slowdown in the Czech Republic is now really quite extensive.

The biggest contributors to the total sales increase were retail sale of furniture, lighting equipment, household articles, electrical appliances, radio and television goods, hardware, paints and glass in specialised stores and sale of food, beverages and tobacco predominating in non specialized stores. The most rapid growth was recorded for sales from the sale of textiles, clothing, footwear and leather goods and the sale of furniture, lighting equipment and household articles, electrical appliances, radio and television goods, hardware, paints and glass. The biggest drop of sales was recorded for retail sale of food, beverages and tobacco in specialized stores (-5.4%), retail sale of second-hand goods in stores (-3.3%), sale via stalls and markets and other non-store retail sale (-2.7%) and the sale in stores with pharmaceutical and medical goods, cosmetic and toilet articles (-1.3%)

Monday, July 14, 2008

Czech Producer Prices June 2008

Czech industrial producer price inflation accelerated in June, and a record rally by the koruna failed to eliminate the impact of soaring oil costs. The price of goods leaving factories and mines grew 5.3 percent from a year ago, compared with a 5.2 percent rate in May, the Prague-based statistics office said today. And this despite the koruna's 22 percent annual gain against the euro and 39 percent rise versus the dollar.

Thursday, July 10, 2008

Industrial Output Falls Back In May 2008

Czech seasonally adjusted industrial output was down by 0.7% in May over April 2008. Industrial production was up 3.4%, year-on-year. The value of industrial new orders was down 1.9%, year-on-year.

Industrial employment increased in May by 22.5 thousand persons over May 2007(i.e. it was up 1.9%). The largest increases were registered in the manufacture of electrical and optical equipment (+6.7%), the manufacture of rubber and plastic products (+5.5%) and in the manufacture of transport equipment (+4.4%). Employment dropped the most in the manufacture of coke and refined petroleum products (-7.0%), the manufacture of textiles and textile products (-5.0%) and in the manufacture of leather and leather products (-4.7%).

The average monthly nominal wage was CZK 23,256 in May (up by 7.1%, y-o-y). The average hourly wage increased by 13.3% (CZK 164.7). Industrial labour productivity increased by 1.2% year on year. while hourly labour productivity was up by 7.4%.

In a separate report the statistics office said that seasonally adjusted total construction output at constant prices increased in May by 0.2%, compared with April. When compared with May 2007, output at constant prices fell by 2.9%. The planning and building control authorities granted 11 379 building permits, i.e. 11.5% up year-on-year. The approximate value of authorised constructions was up by 35.9% year-on-year and reached CZK 34.8 billion. Looking at the chart below the Czech Republic certainly hasn't been passing through a construction boom.

Tuesday, July 08, 2008

Czech Inflation Drops Slightly in June 2008

Czech inflation slowed again slightly in June as the strong koruna helped to keep the rate down, giving the central bank room to delay further interest rate increases at this point. The inflation rate fell to 6.7 percent from 6.8 percent in May, the Prague-based statistics office said in a statement today. The inflation rate has now been dropping steadily since touching a nine year high of 7.5% in January and February. This months result is in line with the central bank's forecast, although it is still significantly above its 3 percent mid-point target. Month on month consumer prices rose 0.2 percent from May.

Today's report confirms central bank expectations that inflation may return to within the target range by early next year without any additional rate-lifting on top of eight in the past 2 1/2 years, to 3.75 percent. The koruna, which has risen by 21 percent against the euro and 41 percent against the dollar in the past year, maintained these gains even after the European Central Bank raised its benchmark rate to 4.25 percent last Thursday.

Prices of clothing, cars and some electronics fell on the month, while food stagnated from May and added 10.4 percent year on year. Cigarette prices and alcohol rose 0.2 percent from the previous month as producers and retailers began to run out of stocks accumulated before excise tax on tobacco was raised.

The price of motor fuels grew 3.3 percent in the month, reflecting a 10.1 percent jump in global oil prices in June on top of a 34 percent growth in the first five months of 2008.

The central bank expects the inflation rate to slide to its targeted range of 2 percent to 4 percent at the beginning of next year as a result of the koruna strengthening, a mitigating effect of one-time influences such as increases in indirect taxes and regulated costs wane and a faltering consumer spending.

That outlook suggests stable interest rates in the months to come and even the possibility of a reduction before the year's end, as suggested by the central bank's staff forecast from early May. The koruna may even allow policy makers to lower rates more than previously indicated minutes from the central bank's June 26 policy meeting indicate.

``Given the current exchange-rate trend, the implied interest rate path of the August forecast might be even lower than that of the May forecast,'' the bank said in the minutes, released on July 4. Decision makers next meet on Aug. 7 to set rates and to publish a new quarterly inflation prediction.

Friday, July 04, 2008

Czech Exports Slow in May

Czech exports stagnated in May, after clocking in a 13 percent year on year increase in April, a sign that the twin effect of the rise in the koruna and faltering demand in Western Europe is now beginning to hurt exporters. Imports fell 2 percent from a year ago, contributing to a trade surplus of 9.2 billion koruna ($609 million). This surplus compares with 8.3 billion koruna one in April, and a 5.3 billion koruna a year ago.

The strange form the imports line adopts would seem to me to be more a consequence of the early calendar date of Easter this year than anything else. Demand for Czech goods in Western Europe is now waning as hedging contracts against the Koruna rise expire and the euro region economy, which is the Czech Republics key trading partner, visibly entering a slowdown.

The koruna has been the world's best-performing currency so far this year, and advanced 13 percent against the euro in the 12 months through May (and was 30.5 percent stronger against the dollar). This sustained appreciation gradually makes exporting more difficult and reduces the chances that we will see a fourth record full-year trade surplus in 2008.

May exports of 205.2 billion koruna, the lowest this year, were unchanged from a year ago. Exports were fueled by a 2.5 percent increase in exports of telecommunication equipment, computers and cars.

Imports fell to 196 billion koruna, also the lowest so far in 2008, which may indicate that companies are cutting back on investments, economists said. The koruna advance also lowers the value of imports in the domestic currency and the slowest household spending in 2 1/2 years dents imports for consumption.