Thursday, October 09, 2008

Czech Industrial Output Down Sharply in August

Czech industrial production fell the most in six years in August, suggesting that the slowdown in Czech economy is gathering momentum quite fast. Output fell 2.6 percent after rising 6.7 percent in July, acoording to data from the Prague-based statistical office on Thursday. This was the worst result since August 2002, when production plummeted 6.6 percent. The value of industrial new orders decreased by 10.0%, year-on-year.

And it looks very much like there is worse to come with the Markit Economics/ABN Amro Purchasing Manager's Index (PMI) for the Czech manufacturing sector fallinf for the third consecutive month in September, and remaining below the critical 50-point expansion/contraction level for the second consecutive month. The index fell to 46.5 in September, down from a reading of 47.3 in August - marking the lowest level in the survey's 87-month history and a 55.8 reading in July.

The Construction Slump Continues

The constant-price seasonally-adjusted construction output index was down by 0.1% in August, when compared with July. In comparison to August 2007, constant price output dropped by 1.2%. The planning and building control authorities granted 11 762 building permits, up 4.2% more year-on-year. Approximate value of permitted constructions was also up by 2.8% year-on-year and reached CZK 36.2 billion.

Inflation Holds Steady

Consumer price dropped in September when compared with August by 0.2 %. The downward effect on the consumer price level, month-on-month, came from the seasonal price fall in domestic recreational stays and recreational stays abroad (as in previous years at this time) and a further drop in the price of automotive fuel. The year-on-year consumer price growth accelerated to 6.6 % in September (from 6.5 % in August).

The month-on-month consumer price level decrease by 0.2 % owed mainly due to a price reduction in 'recreation and culture', in which prices of package holidays went down by 14.6 %. In the 'transport' section the drop in the price of automotive fuel continued for the third month and was 1.7 % in September. The price of petrol and diesel oil was the lowest in the last five months. In 'food and non-alcoholic beverages' prices of fruit, potatoes and other vegetables were all down (by 7.8 %, 8.8 % and 9.2 %, respectively). Prices of rolls and baguettes dropped by 3.3 %, flour by 5.6 %, eggs by 2.3 % and cheese by 1.4 %. In the 'communications' section, prices decreased by 1.1 % due especially to due to lower prices for mobile roaming services.

In terms of the year-on-year comparison, in September, the increase in consumer prices was 6.6 %, i.e. 0.1 percentage point up on August. An price increases accelerated primarily in 'alcoholic beverages and tobacco', 'recreation and culture' and 'education'. Prices of tobacco products rose by 13.1 % (from 8.9 % in August). In spite of a marked month-on-month drop in prices of package holidays, their prices were 1.5 % up, year-on-year. In the 'education' section the y-o-y growth accelerated almost in all levels of educational services. On the other hand, in 'food and non-alcoholic beverages', the y-o-y growth of prices slowed down mainly due to changes in prices of fruit, which were lower by 2.2 % in September (a 3.7% growth in August). Similarly, prices of unsalted butter dropped to 7.6 % in September, while in August they were 1.4 % up. A slowdown in the growth of prices was recorded primarily for rolls and baguettes to 25.6 % (from 30.1 % in September), flour to 40.5 % (from 61.6 % in August) and cheese to 4.9 % (from 10.5 % in August).

The biggest effect on the price level still came from 'housing, water, electricity, gas and other fuels', where prices of natural gas rose by 27.5 %, electricity by 9.5 %, heat and hot water by 11.1 % and solid fuels by 19.9 %. Net actual rentals rose by 14.7 %, of which for dwellings with regulated rentals by 22.3 %, while for dwellings with market rentals by 3.0 %. In 'transport', prices of automotive fuel were higher by 4.3 % (by 5.2 % in August), which is the lowest y-o-y increase over the last eleven months. The growth of petrol prices ranged from 1.7 % to 3.2 %, while the growth of diesel oil prices was 13.3 %.

The average number of persons employed in industry decreased in August 2008 by 5.7 thousand persons, y-o-y (i.e. -0.5%). Employment decreased most in 'manufacture of textiles and textile products' (-12.5%), 'manufacture of leather and leather products' (-6.9%) and in 'electricity, gas and water supply' (-6.8%). Increases in average number of persons employed were registered in 'manufacture of transport equipment' (+4.8%), 'manufacture of electrical and optical equipment' (+3.2%) and 'manufacture of rubber and plastic products' (+1.9%).

The average hourly wage increased by 13.4% and stood at CZK 172.4.

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