Wednesday, June 18, 2008

Czech Retail Sales April 2008

In April, seasonally adjusted retail sales (except automotive segment) grew by 0.7% month-on-month and by 2.0% year-on-year, at constant prices. The increase of 3.5% in not seasonally adjusted sales was higher than the average growth from the start of the year. Only sale of non-food goods grew; sale of food, beverages and tobacco continued to decrease. Seasonally adjusted sales in the automotive segment dropped by 0.4% month-on-month but were up by 2.3% year-on-year, at constant prices; not seasonally sales were up by 6.8%. Seasonally adjusted sales in hotels and restaurants increased by 0.2% month-on-month and unadjusted sales dropped by 1.1% year-on-year.

This is a modest increase, and if taken together with the data from Eurostat today showing the Czech construction industry declined by 3.5% year on year in April it would definitely suggest that the pace of growth is slowing at the present time.

Friday, June 13, 2008

Czech Producer Prices May 2008

Czech industrial producer prices in May rose at the fastest pace in four months, fueled by refined products after global oil costs surged to a record. Prices advanced 1 percent from the previous month, after being unchanged in April. The annual rate increased to 5.2 percent from 4.7 percent in the previous month, according to the latest data from the Prague-based statistics office.

Agricultural producer prices, which are not part of the industrial price index and signal the future direction of consumer food prices, advanced 0.5 percent in the month while the annual rate climbed to 28.2 percent from 27.9 percent in April.

In May 2008, compared to the previous month, prices of agricultural and industrial producers, construction work and market services grew by 0.5%, 1.0%, 0.4% and 0.1%, respectively. In comparison to May 2007, prices of agricultural and industrial producers increased by 28.2% and 5.2%, respectively; prices of construction work and market services were up by 5.0% and 4.0%, respectively.

In April 2008, export prices did not change, import prices increased by 0.1%, month-on-month. Year-on-year, export prices fell by 5.0% and import prices by 4.2%. The terms of trade figures reached 99.9%, m-o-m, and 99.2%, y-o-y.

Agricultural producer prices grew by 0.5% in total. Prices of crop products rose by 2.4% due to higher prices of cereals (+2.1%), fruit and oil plants (+2.3% both), and hops (+93.4%). The prices of potatoes and vegetables fell by 2.7% and 20.2%, respectively. Prices of animal products decreased by 2.2%; prices of eggs (-5.6%) and milk (-5.8%) were lower. Higher prices were recorded for cattle for slaughter (+0.4%) and pigs for slaughter (+4.2%).

Industrial producer prices grew by 1.0% (no change in April). Prices went up most markedly in ‘coke, refined petroleum products’ (+9.1%, the highest increase since June 2004) and ‘basic metals, fabricated metal products’ (+2.1%). On the other hand, prices in ‘food products, beverages and tobacco’ went down by 0.2% (lower prices of tobacco and dairy products).

Construction work prices rose by 0.4%, construction material input prices grew by 0.2%.

Prices of market services in the business sphere grew by 0.1%, due to a 0.2% price rise in ‘real estate, renting and business services’ (prices of computer activities up by 0.6%).

Year-on-year comparison

Agricultural producer prices were higher by 28.2% (+27.9% in April). Prices of crop products grew by 41.1%, mainly due to higher prices of cereals (+57.7%), oil plants (+71.9%) and hops (+135.0%). The prices of fruit increased by 42.2%. The prices of potatoes and vegetables fell by 45.9% and 0.9%, respectively. Prices of animal products were higher by 12.6%. The prices of milk, poultry, eggs and cattle for slaughter grew by 17.6%, 15.8%, 14.2% and 8.0%, respectively. Lower prices were recorded for cattle for slaughter (-1.9%).

Industrial producer prices rose by 5.2% (+4.7% in April). The price level was the most influenced by prices of ‘coke, refined petroleum products’ (+28.3%) and prices of ‘food products, beverages and tobacco’ (+8.6%). Prices went up particularly in ‘prepared animal feed’ (+35.8%), ‘dairy products and ice cream’ (+10.4%) and ‘other food products’ (+8.0%). Prices of ‘electrical energy, gas, steam and water’ increased by 9.1%. Prices decreases were recorded only in ‘transport equipment’ (-4.1%), ‘rubber and plastic products’ (-2.8%), ‘wood and products of wood and cork’ (-3.9%) and ‘textiles and textile products’ (-0.5%).
Among the main industrial groupings, prices of ‘energy’ (+15.1%) and ‘non-durable consumer goods’ (+4.2%) increased the most.

Construction work prices were higher by 5.0% (+4.9 in April); construction material input prices grew by 2.6% (+ 2.9% in April).

Prices of market services in the business sphere were higher by 4.0% in total (+4.3% in April). Prices of ‘real estate, renting and business services’ increased by 5.6% (prices of advertising services up by 10.4%). Prices of ‘freight transport and storage services’ and ‘financial intermediation, except insurance and pension funding’ increased by 2.5% and 2.2%, respectively.

Wednesday, June 11, 2008

Czech GDP Q1 2008 (Revised Data)

The Czech economy expanded at the slowest pace in more than three years in the first quarter as consumer spending weakened, taking some of the pressure off central bank policy makers to raise interest rates.

Gross domestic product rose 5.3 percent, compared with a revised 6.3 percent in the previous quarter and a preliminary 5.4 percent announced on May 15, the Czech Statistical Office said today. The economy's rate of expansion slowed for a third consecutive quarter after peaking at a record 6.8 percent in 2006.

Household spending was constrained by inflation, which accelerated to 7.5 percent in January, the fastest pace in a decade, before slowing to 6.8 percent in the past two months.

While inflation has been driven by global increases in food and fuel costs and the Jan. 1 tax and regulated-price increases, a fourth year of economic growth topping 5 percent, driven by rising wages and consumer spending, has also helped push prices up.

The waning impact of domestic demand on GDP growth, along with an appreciating koruna, has added to optimism that the inflation rate will fall to its mid-point 3 percent target early next year. The koruna has gained 7.6 percent against the euro so far this year and 16 percent over the past 12 months.

The Ceska Narodni Banka, the government and economists expect the economy to lose momentum this year, growing below 5 percent from a revised 6.6 percent in 2007 because of a projected slowdown in the euro region, faster inflation, limited government social expenditures and the appreciating koruna.

Consumer spending, the main engine of GDP growth in the past two years, rose 2.8 percent year on year in the first quarter, compared with 4.2 percent in the preceding period. Household spending accounted for 1.3 percentage points of GDP growth.

Exports of goods and services climbed an annual 13.8 percent in the first quarter, outpacing a 12.1 percent increase in imports. Government expenditure gained 0.7 percent in the January- March period.

Gross fixed investment rose an annual 2 percent, the slowest pace in more than two years, compared with 7.5 percent in the fourth quarter. That may signal that Czech manufacturers are cutting back on investment in reaction to falling orders from abroad.

The central bank, which forecasts this year's GDP growth at 4.7 percent and 4 percent in 2009, had expected the economy to grow by 6.3 percent from January through March, and the difference between this forecast and the actual result is largely the result of revisions in data for earlier quarters according to the central bank.

On the other hand the central bank's May inflation prediction anticipated a more moderate slowdown of consumer spending and an acceleration in investment growth.

Monday, June 09, 2008

Czech Inflation May 2008

The Czech inflation rate in May was unchanged from April at 6.8 percent as rising food and fuel costs prevented a third consecutive decline in annual price growth and reduced short term prospects for an interest rate cut.

Consumer prices rose 0.5 percent month on month, following a 0.4 percent jump in April, according to the Prague-based statistics office today.

Inflation has exceeded the Ceska Narodni Banka's 4 percent upper limit in every month since November, driven by food and oil and rising taxes and regulated costs. The central bank predicted the rate would fall to its 3 percent target in early 2009 without raising rates.

The possibility definitely exists that the inflation rate may rise again above 7 percent in the months to come, after peaking at a decade-high of 7.5 percent in January and February. The central bank next meets on June 26 to set interest rates.

The cost of motor fuels added 3.9 percent from April, with diesel reaching a record, the office said. The increase reflected a 16 percent advance in global oil prices during May. Prices of food, with a one-fifth weighting in the consumer basket, surprisingly rose 0.7 percent from April and 10.6 percent from a year earlier, led by vegetables, fruit, bread and rice, according to the central bank.

The Czech central bank is to some extent relying on the koruna's strength to slow household and import demand this year and to counter the inflationary effect of a fourth year of economic growth of over 5 percent. The most recent staff projection seemed to imply a cut in what is the European Union's lowest main rate of 3.75 percent as early as this year, but this forecast is now looking extremely precarious.

The so-called monetary policy-relevant inflation rate, which excludes the first-round impact of tax changes, fell to 4.6 percent in May. Monetary policy makers disregard the primary impact of cost shocks and regulated-price influences as they are out of the reach of monetary policy and are typically of a one-time nature. Instead, the bankers focus on their second-round effects such as increased demands for pay rise as a way to compensate for inflation spike, which could prevent a decline in inflation.

May core inflation, (which is price growth adjusted for volatile items such as food and motor fuels) accelerated to 2.85 percent from 2.75 percent, suggesting persisting demand pressures and the danger of more "second round" effects.

Today's figure may add to concerns by some board members that the koruna, which gained 16 percent against the euro and 36 percent against the dollar in the past 12 months, may not now be as effective an inflation damping tool as it has been in the recent past.

Wages grew an annual 10.4 percent in the first quarter to 22,531 koruna ($1,398), the biggest jump in more than nine years, the statistics office reported on June 2. Even when adjusted for the fastest inflation in a decade, growth of real salaries accelerated to 2.8 percent from 1.7 percent in the fourth quarter of 2007.

Under the European Union's harmonized consumer prices index was up 0.4 percent month on month and 6.8 percent from a year earlier, following a 6.7 percent rate in April, the statistics office reported today.

Monday, June 02, 2008

Czech Wages and Salaries Q1 2008

Czech real-wage growth accelerated in the first quarter, raising concern that the central bank will lift the European Union's lowest interest rates once again.

The average gross monthly wage added 10.4 percent to 22,531 koruna ($1,398), the biggest jump since Q4 1998. The average monthly paycheck rose 2.8 percent, adjusted for inflation, compared with a revised 1.7 percent in the previous quarter, the Prague-based statistics office said today.

Real wages will probably continue to grow more slowly this year as rising consumer prices eat up most of nominal pay increases. The central bank expects inflation to return to its 3 percent target early next year, but this obviously remains to be seen. Policy makers monitor wage growth as a secondary indicator of price growth.

The average inflation-adjusted monthly wage rose 4.5 percent at private companies as the jobless rate fell to 5.2 percent in April, the lowest since the data series started in 2004. Gross private wages rose 12.2 percent in a year.

Salaries of state employees grew 3.5 percent in the quarter from a year earlier to 20,204 koruna, a 3.6 percent decline in real terms. The government, which last year capped public wage gains to curb a jump in spending, will probably face increased pressure to raise public wages, economists said.

The smallest relative growth of nominal wage (by CZ-NACE section) was recorded in education, public administration and defence, compulsory social security (both by 3.0%) and in health and social work, veterinary activities (by 5.3%). The biggest growth was recorded in electricity, gas and water supply (by 18.2%), fishing, fish farming and related service activities (by 17.2%) and real estate, renting and business activities (by 17.1%).

Monetary policy makers will evaluate the effects of accelerating inflation and currency gains on economic growth before deciding whether to further raise interest rates from 3.75 percent, currently the lowest in the European Union.