Confidence among manufacturers in the Czech Republic slipped for the third month in a row, according to the monthly snapshot of the sector stemming from a survey of purchasing managers.
HSBC’s Purchasing Managers’ Index for January, released on Wednesday, showed the overall index falling to 48.8 points from December’s 49.2 points. Any figure below 50 reflects falling confidence in the sector.
While industrial output rose in January from December, with companies working through a backlog of orders and making a dent in their overall levels, new business continued to dry up with firms cutting their own orders as a result.
“Incoming new business declined further in January, extending the current run of contraction to three months. A number of firms reported weakening demand from Western European markets, and new export orders also fell for the third successive survey,” a statement accompanying the HSBC survey results said. “That said, the rates of decline in both total new business and new export contracts eased since December.”
‘The emerging picture is for only moderate slowdown in manufacturing growth though downside risks persist.’
Manufacturing companies also looked more closely at their staff levels given worries over future demand. “Falling intakes of new business influenced firms’ hiring decisions in January. Czech manufacturing employment fell for the third month running, and the rate of job shedding accelerated further to the fastest since December 2009,” the commentary explained.
HSBC economist for Central and Eastern Europe, Agata Urbanska, said higher confidence levels and output in Germany, the Czech Republic’s main export market, suggested a less negative outlook than some of the figures might suggest. “The emerging picture is for only moderate slowdown in manufacturing growth though downside risks persist. Employment component worsened further in January and labor market remains a weak spot for domestic demand outlook, ” she commented.
The overall trend is for a sharp fall in Czech manufacturing confidence since the start of 2011 with sporadic interruptions in the slide.
The HSBC’s Purchasing Managers’ Index is prepared monthly for the British multinational banking and financial services company headquartered in London by financial services information company Markit.
