We have updated our Flash leading indicator for the Czech republic, which rose for the eighth consecutive time. Moreover, after a data revision, Czech industrial output rose for the fourth consecutive month (normalised from February to May). Encouragingly, the growth rate (positive contributions) of the Flash stopped decelerating, for the first time in three months. Had the positive growth rate continued to decelerate, it would not have been a good sign for the recovery of industry.
When a recovery is real, the signals are usually clearer and leading indicators such as the Flash are improving at an accelerating rate. We consider eight consecutive improvements of the Flash as fairly strong positive evidence. Moreover, in the last month, we again saw all but one component of the Flash improve, with that being new orders from carmakers. In addition, the hard data from industry was also decent. Thus the recovery of industry in the second and third quarters seems to be increasingly likely.