The Czech Manufacturing Sector Experienced A 2.7% Annual Decline

The Czech manufacturing industry experienced a significant decline, as March saw a return to a decrease in industrial production. An annual drop of 2.7% was reported, and production was down by 1.6% compared to February. The Czech Statistical Office (CZSO) released these figures, giving a clear picture of the industry’s current state.

Two factors mainly influenced the significant dip in industrial production in March. The first was the extraordinarily high comparative base from last year’s motor vehicle production. The second was the ongoing decline in the production of machinery and equipment, which has now affected most sectors in this industry, as reported by Radek Matějka from the CZSO.

Interestingly, the value of new orders increased annually by 5.1%. New foreign orders rose by 8.6% compared to last March, while new domestic orders declined by 1.1%. However, statisticians noted that the value of new orders was down by 1.5% every month.

Despite low expectations, the industry managed to disappoint, as the chief economist of Cyrrus, Vít Hradil, commented. “The industry continues to suffer from weak demand. Investment activity is dampened by relatively high domestic and foreign interest rates. Consumer activity is only gradually awakening, and our main trading partner, Germany, is floundering on the brink of an economic downturn,” added Hradil.

According to Miroslav Novák, an analyst at Akcenta, a sustainable revival of the domestic industry is still being postponed. “Looking at the leading indicators from the Czech Republic and Germany in April, it does not seem likely that there will be a noticeable improvement in production activity even in the second quarter,” commented Novák.