Wednesday, 23 April 2014

Higher industrial output in October is no return to growth, analysts say

11 December 2012

Prague, Dec 10 (CTK) - The industrial production results for October do not mean return to growth and even when the production increased by 4.1 percent year on year, the figure was reached only thanks to the higher number of working days, analysts addressed by CTK said.

Only the 5.3 percent growth by new orders is a reason for moderate optimism, they add.

"Working days adjusted, industrial production dropped by 3.3 percent yr/yr, which we see as a disappointment - we have estimated industry to fall by 'only' 1.7 percent after adjustment," said Raiffeisenbank analyst Vaclav France.

France estimates industrial production to fall by 0.2 percent in the whole of this year and to grow by 0.7 percent in 2013.

A better result, in harmony with expectations, was achieved by engineering, production of electrical equipment, and chemicals and chemical products, CSOB analyst Petr Dufek remarked.

Car production brought no fascinating result but the car industry has enough new orders, he added.

"The inflow of new orders to industry signals that recession in this sector does not have to be as drastic as the past one," Dufek noted.

"In any case, industry can hardly avoid the impacts of the falling west European demand which lowers the total outlook for the Czech Republic's principal export market," he said.

Analyst Miroslav Novak of the firm Akcenta is also positive as regards the growth in new orders. Demand still comes mainly from abroad but domestic demand also grew in October - by 3.3 percent yr/yr, he stressed.

"The growth in new orders may be a pleasant surprise but premature optimistic conclusions cannot be drawn from just one figure," Novak pointed out.

"Weak domestic demand will certainly not bring a turnaround for the better. Even foreign demand, which has been pulling Czech industry in the past years, cannot be fully relied on. For further development in industry, how fast-developing economies headed by China do will be of key importance," he added.

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