The seasonally adjusted Manufacturing Purchasing Managers’ Index (PMI) compiled by market intelligence company S&P Global posted 43.8 for Czechia in July as local manufacturing companies continue to face record downturns.

The index has been below the 50-point mark separating growth and decline for well over two years now and is also down on June's 45.3 and May’s 46.1. Production levels were falling at the quickest pace since November 2022.

“The operating month of the second half of 2024 brought further downward momentum across the Czech manufacturing sector, as operating conditions deteriorated at a faster pace,” commented principal economist at S&P Global Market Intelligence, Sian Jones.

Jones said that “sharper contractions in output and new orders weighed on the health of the sector, with demand from key industries and export partners waning”, adding that “firms sought to absorb price hikes, as the impact of higher sea freight costs partly led to a faster rise in input prices but output charges were left broadly unchanged on the month.”

The decline in operating conditions was the fastest since January, S&P also highlighted, noting that demand from key export partners such as Germany and France remained muted.

Weak demand led companies to offer discounts or hold stable prices to keep sales alive. Employment also continued to fall although layoffs were not occurring at such a pace as in June. Despite the worsening conditions, manufacturers still expect output to pick up in the coming year.

“The overall degree of optimism dipped to a five-month low,” S&P report concludes, and Jones noted that the “business confidence was the lowest since February.”