The Manufacturing Purchasing Managers’ Index (PMI) for Czechia, compiled by market intelligence company S&P Global, inched upwards in February to 44.3 amid some positive signs in the struggling manufacturing sector.

It is up from 43.0 in January but below the 50-point mark separating growth and decline.

“Czech manufacturing firms signalled signs of optimism across the sector in February, with PMI data indicating a less marked decline,” commented Sian Jones, principal economist at S&P Global Market Intelligence.

“Softer contractions in output and new order, alongside the strongest degree of confidence in almost a year, provided glimmers of light,” Jones added.

S&P noted that while the sector remained in contraction, the overall decline softened “to the weakest since March 2023. Both domestic and external demand remained subdued and companies were forced to lay off staff.”

Price reductions were occurring in February, though at a slower pace than in the previous month. Higher operating expenses related to greater energy, transportation and wage costs were also reported. Manufacturers were lowering their selling prices “for the tenth month running” to remain competitive.

S&P also noted that “the degree of confidence reached the highest in almost a year as firms were buoyed by planned investments […] and hopes of more favourable demand conditions”.

“Our latest forecast anticipates further cuts to interest rates by the Czech National Bank in the opening half of 2024,” Jones concluded.