Industrial production surprised negatively again. Most of the negative figure for the production can be explained by the fact that September had two working days less than the same month of the previous year. However, working-day-adjusted data are also negative and suggest that industrial sector dives deeper into the recession.
The key sector of the Czech economy, car production, scored a drop by 11.1% yoy. Steel mills output decreased by 10.8% yoy. Assembly of electronic devices and IT equipment declined 15.1% yoy. Recently Panasonic, making LCD screens in the Czech Republic, decided to shut its Czech plant. So, figures of the industrial production may look even more depressively.
Declining production and sales led to cost cuts. Thus, employment declined by 0.8%, an average wage by 0.3% compared to September 2011. Both factors are the main reason behind the slack in the domestic demand.
New orders declined by 5.4% with negative figures in both, domestic and export orders. If we add PMI keeping below 50-point threshold, the outlook does not bring any relief. In 2012, we forecast industrial production to drop 0.5%.
Actual (Sep): -7.0% yoy
Consensus: -5.0% yoy
Previous (Aug): -3.1% yoy