Record contraction of Czech industry in April driven by 80% fall in car production

Record contraction of Czech industry in April driven by 80% fall in car production
/ Ladin
By bne IntelliNews June 9, 2020

Czech industrial production in April decreased the most in the country's modern history, down by 33.7% year-on-year, which was worse than the market estimate of 25%, according to the latest data released by the Czech Statistics Office (CSO) on June 8.  The main reason was a significant fall in automotive production by 80.1% y/y.

“The strong decline was not so surprising as major car maker factories were closed. Only Hyundai reopened in mid-April, but it was not operating at full capacity. As such, only 14,500 cars were produced in April vs. a monthly average of 120,000,” commented ING chief economist Jakub Seidler, adding that this should be the bottom, however, recovery in May remained slow.  

“May will bring some improvement, but not much as Toyota Peugeot Citroen Automobile remained closed during May. Also, the May PMI improved just slightly, approaching 40 points, which still points to a deterioration of conditions in industry,” he said. 

Seasonally adjusted industrial production went down by 23.4% month-on-month. Sales from industrial activity at current prices fell by 35.5% y/y in April. Direct export sales of industrial enterprises declined at current prices by 41.7% y/y. Domestic sales, including indirect export via non-industrial enterprises, went down at current prices by 27.3% y/y. 

The value of new orders decreased by 42% y/y. “Non-domestic new orders decreased by 44.6%, while domestic new orders decreased by 36.3%,” commented the director of the CSO’s agricultural and forestry, industrial, construction and energy statistics department, Radek Matejka. 

The average registered number of employees in industry posted a drop by 3.2% y/y in April. Their average gross monthly nominal wage decreased by 5.6% y/y.

“Czech industry will fall by at least 10% this year, with the automotive sector being hit hard. We thought that a German scrappage scheme would help but this has not been approved. While grants for electric vehicles have been doubled in Germany this will be of limited help to the Czech automotive industry,” Seidler noted. 

“Automotive support has not yet been discussed by the Czech government, though talks could start if the sector continues on a very weak footing,” he added.

Data

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