Czech Manufacturing Worsened for Fourth Month in July, PMI Shows

Czech manufacturing performance worsened for a fourth month in July as companies continued to book fewer orders from the country’s main export markets, an industry gauge showed.

The HSBC Czech Republic Manufacturing PMI was 49.5 in July, compared with 49.4 in the previous month, the bank said today in an e-mailed report. A result greater than 50 signals improvement in manufacturing performance, while a figure below signals deterioration.

“New export business received in the Czech manufacturing sector fell for the ninth month running in July, the second- longest sequence in the survey history,” the bank said in the report, compiled by Markit, a financial information services company.

Gross domestic product fell 0.8 percent in the first quarter from the final three months of 2011, the second contraction in as many quarters, as households cut spending in response to a worsening economic outlook across Europe. The economy relies on demand for cars, auto parts and electronics goods from the European Union, the market for about 80 percent of Czech exports.

The central bank in Prague cut the benchmark interest rate to a record-low 0.5 percent in June saying the government’s plan to introduce more measures aimed at cutting the budget deficit, including tax increases, would further depress consumer demand and tame inflationary pressures.

The decline in new orders was “modest” in July, while production was stagnant and inflationary pressures continued to ease, HSBC said.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net