Volume of industrial output grew by 0.9% in November compared to last month and by 7.2% y/y respectively. It comes as no surprise that the main reason is grow within automotive industry.
Analysis of contribution of individual sectors is fairly simple. Half can be attributed to Machinery and transport equipment production where y/y increase is nearly 30% fourth month in a row. Two digits figure is also reported by steel manufacturers. Production of steel and metal products added 10.3% and its share on the general growth in the sector was about one fourth. Impact of other sectors on the positive numbers was significantly lower.
Recruitment in the automotive industry and its influence on production of plastics, rubber products and other sectors of industry led to increase in employment in industry by 0.2%. Labour productivity grew by 10.5% y/y. In addition, because the average wage grew by 5.2%, unit wage costs decreased by 4.8%. Decline in costs opens-up space to increase competitivness and earnings which will show either in higher volume of reinvested earnings or repatriated dividends.
Combination of statistics in industry and new contracts offers positive prospects. Revenues grew in November by 10.7% so distinctively higher than production.
Volume of new contracts grew by 2.3% m/m, 6.4% respectively. Both indicators show that production does not remain in storage. The decisive factor is again revival of demand in Western Europe where most of the Czech export is heading. As a barometer for Czech industrial production its German counterpart can be used, which in the last few months recorded significant improvement as the indexes of production, business climate and sentiment of investors show. We anticipate increase of 5.7% of industrial production in the Czech republic for the whole last year and we calculate on another increase of 5% for this year.