Czechia’s manufacturing index, compiled monthly by S&P Global market intelligence company, has dropped to 44.8.

It is the second consecutive monthly drop, having decreased to 46 in November, down from 47.2 posted in October. The index has remained below the 50-point mark separating growth and decline for over two and a half years now.

“December data signalled a further decline in the health of the Czech manufacturing sector, as the year ended on a sombre note,” commented Sian Jones, principal economist at S&P Global Market Intelligence.

“A faster drop in output and continued sharp contraction in new sales weighed on the goods-producing industry, as stocks and employment were cut at steeper rates,” she said.   

It was the sharpest rate of decline in the manufacturing condition in the past five months, S&P Global highlighted, adding that weak client demand pulled down new orders and new export sales. Companies continued to shed their staff and lower input purchases.

S&P also noted “challenging demand conditions” in the country’s key automotive sector, “weighing on output levels”, and continued weak demand in key export destinations led by Germany.   

“Challenges in the European car industry represent the main source of the trouble with suppressed output, declining new orders, and wrecked confidence,” ING’s Czech chief economist, David Havrlant, wrote in his comment.  

Input costs increased for the eleventh month in a row, including a spike in food and transportation prices, which respondents pointed to as drivers of inflation. However, easing cost pressures also led to a reduction in selling prices for a third consecutive month.

Despite the challenging conditions, manufacturers also registered hopes of improvement in the upcoming months.

“Looking forward, however, manufacturers were more optimistic in the outlook for output over the next year as hopes of a rebound in demand in 2025 strengthened,” Jones concluded.