At the beginning of 2020, industrial output confirmed its ability to raise. The development at the beginning of the year provided hope for the improvement of manufacturing activity. But from March, with COVID-19, we will see worsening figures.
In January, industrial production increased 1.1% mom. That means -1.4% yoy (SA WDA), which was close to market expectation. That was a positive result, which however comes after significant decreases in the preceding months. At the beginning of the year, the data also show an increase in the leading indicators and rising industrial production in Germany.
In a year-on-year comparison, production increased in motor vehicles (3.0% yoy), computers and electronics (6.9% yoy) and the manufacture of wood (9.2%), which is probably supported by the massive spread of bark beetles. On the contrary, industrial output declined in the energy sector (-5.8% yoy), the manufacture of fabricated metal products (-5.5% yoy) and the manufacture of machinery and equipment (-3.2% yoy).
Sales from industrial activity returned to growth with a yoy rise by 1.1%. The value of new orders from abroad decreased 0.8% yoy, while domestic orders increased a solid 6.0%. On average, the value of new orders increased 1.3%.
The year-on-year drop in employment intensified further to 2.1% after 1.8% in the previous month. The average wage in the industrial sector decelerated to a still solid 6.4% after 7.2% in the preceding month.
New data from the beginning of the year do not look bad. Within today’s context, this is slightly outdated news, but it also indicates how the economy could develop once the epidemic is under control.
For this year, we expected a slight increase of industrial output. Nevertheless, the fear surrounding the epidemic, the following government measures against its spread and the decline of external demand for the coming weeks or months will impact the forecast negatively. Industrial output will therefore probably decline on average.
For the CZK exchange rate, the new data from the domestic economy, which are moreover closer to expectations, are currently not important.