Conditions in the Czech manufacturing sector improved in October, when the PMI index rose to 51.9 points from 50.7 points in September. IHS Markit informed about it. The index is thus the highest since October 2018. The level of 50 points in the index is the divide between growth and decline. A score of over 50 points means an improvement in the sector.
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“Although the industry continues to grow solidly for the time being, the growing second wave of the pandemic poses a number of risks, not only in terms of a renewed drop in demand from more affected sectors, but also in terms of possible production cuts due to the spread of disease among employees or supply chain problems. , “Said Jakub Seidler, ING’s chief economist.
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The growth of the index is mainly due to the growth of production and new orders. At the same time, however, companies are less optimistic about the outlook for the next twelve months, and their confidence has fallen to a minimum in four months, IHS Markit warned. At the same time, depending on stronger demand, producers hired new workers for the first time since February 2019. However, the increase in employment was only slight and is associated with a further increase in production.
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“In October, the Czech manufacturing sector showed further signs of recovery from the pandemic-induced economic downturn. Signals of growing demand appeared, and at the same time customers from abroad renewed their interest in Czech industrial goods, “said IHS economist Markit Sian Jones.
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Seidler pointed out that in Germany and the eurozone, the October PMI indices also improved and were already well above the 50-point mark. “In Germany, the manufacturing PMI reached 58 points, the highest value in two and a half years, and in the eurozone, it reached 54.4, which is the highest value in about two years,” he said.
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According to Komerční banka economist Michal Brožka, the growth in production activity is good news. “Nevertheless, we believe that there will be a negative impact on production. On the other hand, there is a good chance that the second wave of the pandemic will not lead to a spontaneous closure of industrial production, as in the spring. The reason is better development abroad and thus the existing external demand, “he said.
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