A Year After Shutdowns, Czech Industry Gains Momentum

Czech industrial output showed a bit of momentum in March, growing 3.2% month-on-month and marking its biggest year-on-year jump since 2007, a year after factory shutdowns at the outset of the COVID-19 pandemic sent production crashing.

The monthly rise was higher than some analysts expected and comes despite central European factories, geared heavily to the car industry, grappling with a global shortage of semiconductors and delayed supply deliveries.

On a year-on-year basis, Czech output soared 14.9%, higher than expected and following a 2.6% decline in February.

The gain was mainly a reflection of a low comparative base, as many factories idled production one year ago. The stoppages have not been repeated during stronger waves of the pandemic since.

Komercni Banka’s Senior Economist Michal Brozka said in a note that the monthly rise showed industry could still expand even amid component delivery problems.

The bank expects the Czech industry to gain around 9% this year but that March data gave hope growth could be over 10%, with the component supply disruptions being the main drag, Brozka said.

In separate data, the Czech trade balance in March also showed a year-on-year jump to a surplus of CZK 18.5 billion, rising largely on base effects as car exports were up.

In Slovakia and Hungary, trade surpluses also bounced in year-on-year comparisons.

“Foreign demand remains in a good shape, lending a helping hand to the Slovak economy, even amidst the second wave of infections in Slovakia and many European countries,” Erste Group Bank said.