Czech industry performed well in July

Regarding the results of the Czech industry, July was a successful month and it belongs to the periods that have overcome our expectations. The industrial production growth was 8,6 percent year-over-year (working day adjusted figures amounted to 6 percent) which is more than the first half of 2014 average of 6,2 percent. In comparison to June, the Czech industry, seasonally adjusted, raised by 0,7 percent.

At the beginning of the second half of the year, the industry remains the driving force of the Czech economy.  Although its contribution to the gross value added of the Czech economy represents only 32 percent of the total, its contribution to the overall growth is far more significant as the  performance of the Czech industry indirectly influences other sectors of the economy.

We should, nevertheless, to evaluate the good results of the beginning of the second half of the year more cautiously. The industry will not decrease, but the growth figures could be less progressive. Our surveys organised in the second quarter of the year and the value of key performance indicators  (e.g. contracts or investments) show a moderate optimism as for the continuous recovery in the second half of 2014.

Although the economic results of most companies don’t indicate any vertiginous growth and they are large differences among them, we could confirm a stabilization and a moderate growth in the whole industrial sector.

There is a continuous raise in the number of contracts, both in the domestic and foreign demand. The increase in the number of contracts amounted to 17,6 percent. As for the structure of the new contracts, the domestic ones have represented one third of the overall figure. This growth tempo could be eased in the next months due to the gradual improvement of most of the indicators and the increase of the comparative basis.

The growth of the Czech industry could be influenced also by the slowing-down of the EU and German economy as well as by the impact of the sanctions against Russia in the months to come.

This effect will be perceived with delay and for now, the export to Russia raised by 1 billion CZK interannually. There is, nevertheless, a decrease in trading with Russia to be awaited.

On the other hand, the export to eurozone, USA or Great Britain is raising, a dominant role being played by the motorcar industry production.

In July, the Czech export increased by 18,3 percent and the import by 15,7 percent in year-over-year comparison. It has been influenced by a weaker Czech crown and one additional working day.