Producer prices fell by 0.2% in December, pushing the y-to-y index to 5.0%. The number is below our forecast of unchanged prices and even more significantly below the market consensus of 0.2% growth. The fall was driven by higher-than-expected fall of prices in the oil industry, where cheaper oil on world markets pushed prices 6% down. The low number confirms benign inflation pressures within the economy and it is definitely a good news for the bond market.
Industrial production grew by 4.3% in November 2000, i.e. in line with Patria forecast of 4.8% and slightly below the S&P´s market consensus of 6% growth. The number confirms the trend of last months: after adjustment for number of working days, the industrial production rose by 6.5%. We maintain our 5% forecast for the industrial production in the whole year 2000. Note that December 2000 might turn out particularly bad, as it had 3 working days fewer than December 1999. Industrial sales grew by 5.4%, number of employees shrank by 0.7% and productivity thus jumped by reasonable 5%. As nominal wages grew by 8.6%, the productivity still grows faster than wages, but the gap is shrinking.
Construction output increased by 11.7%, y-o-y, in November (adjusted for the number of working days: 13.1%). The labor productivity post an increase by 17.2%, while nominal wages rose by 9.6% and real wages thus increased by 5.1%.
The Lower House adopted a new Czech TV law that should end a strike. A strike by the station's employees which has won massive public support and wide publicity abroad, was sparked by the appointment of Jiri Hodac as the station's director-general on December 20.
The Czech koruna traded little changed against the euro on Friday despite lower-than-expected December producer price index data.
In late afternoon trading the crown was at 35.350 and closing on Thursday at 35.40. The koruna/dollar was at 37.214 from 36.03 late on Thursday.
The longest dated state bond 6.40/10 eased 55 bps to 96.60/90, yielding 6.90/86 percent. The state 6.7-5/05 was off 23 bps at 101.27/57, yielding 6.38/30.