Czech PMI at near 3-year low in May

Czech manufacturing new orders dropped sharply in May contributing to “the greatest overall worsening in business conditions in the goods-producing sector since August 2009,” an industry gauge said Friday.

The HSBC Czech Republic Manufacturing PMI fell to 47.6 from 49.7 in April (a result greater than 50 signals improvement in manufacturing performance), signaling an outright deterioration in business conditions in the manufacturing economy in May.

New orders fell at the fastest pace in almost three years, while output stalled and firms shed jobs on average.

“It is hard to beat the bad news conveyed by a much deeper than expected GDP contraction in the first quarter of this year and in this sense, the weakening PMI comes as no surprise,” said Agata Urbanska, Economist, Central & Eastern Europe at HSBC, in a press release. “But the PMI index points to downside risks in the coming quarters.” 

She said the Czech central bank will likely respond to this worsening with further easing of monetary policy.