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Czech Manufacturing Sector Contracts Further In May

The Czech Republic's manufacturing sector contracted at the second sharpest pace since the depths of the global financial crisis over eleven years ago, amid coronavirus outbreak, survey data from IHS Markit showed on Monday.

The headline manufacturing Purchasing Managers' Index, or PMI, rose to 39.6 in May from 35.1 in April. Any reading below 50 indicates contraction in the sector.

Output and new orders contracted in May. The rate of decline in production eased, but this was one of the fastest since the survey began in June 2001.

New export order volume declined due to weak foreign client demand in May and backlogs of work deteriorated. The rate of job shedding was the second-sharpest since July 2009 due to continuing uncertainty.

Purchasing activity declined at the second-quickest rate since March 2009 amid weaker client demand.

On the price front, manufacturers reduced their factory gate charges and the rate of input cost inflation eased.

The Czech National Bank (CNB) forecasts slower inflation in the coming months, with the recent interest rate cuts mirroring the challenging economic conditions, Siân Jones, an economist at IHS Markit, said.

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