Conditions in industry worsened. Production fell, orders fell

Czech industry struggled in April with weak demand and companies cut spending in an attempt to mitigate the impact of a drop in new business. Although input purchases fell sharply and supplier performance generally stabilized, the pace of inflation accelerated due to higher energy and food prices. Sales prices, on the other hand, rose for the first time in a year, albeit slightly.

The purchasing managers’ index (PMI) fell to 44.7 points in April from 46.2 points in March, S&P Global said today. The level of 50 points in the index is the dividing line between growth and decline of the sector.

“Operating conditions in Czech production deteriorated at the beginning of the second quarter due to the continued pressure of weak demand for new orders and production. Their decline accelerated, and companies responded with restrictions. “Employment fell at a sharper pace and a sharp reduction in input purchases followed efforts to reduce inventories,” said S&P Global Market Intelligence Chief Economist Sian Jones.

Higher prices for energy, food and imported goods led to a much faster increase in cost pressure, she said. Input prices rose at the fastest rate in more than a year, and companies were forced to partially pass them on to customers.

The slowdown in demand on the domestic market and in the main export destinations, including Germany, worsened again and led to a further decline in new orders in April. According to Czech producers, it was sharper than in March, but it was the second slowest in 21 months. At the same time, new exports fell again, so the current trend has lasted for more than two years. The drop in foreign demand was sharp, but slowed to a five-month low. A faster decline in total orders, together with a further reduction in work-in-progress and efforts to reduce inventories of manufactured goods, led to a faster decline in production in April. His pace was the highest in three months.

The lower intake of new orders led to a drop in production requirements, to which Czech manufacturers responded by further reducing their workforce in April. In an effort to cut costs, companies cut the ranks of full-time employees. Layoffs were significant and faster than in March. Although confidence rose to the second highest level in two years, it has fallen since March. Optimism was fueled by hopes of a recovery in consumer demand, S&P Global said.