Czech manufacturing confidence firmed in February following slides in the previous three months, according to survey of the sector released on Thursday.
The monthly Purchasing Managers Index (PMI) compiled by Markit for the HSBC bank moved into positive territory over the month in spite of the fastest decline in new export orders seen since mid-2009.
“At 50.5 the headline figure signaled a broad stabilization of business conditions as new orders were up fractionally and output expanded, but employment declined further,” a statement said.
Manufacturing output grew in February following stagnation over recent months, some companies were apparently making inroads into their backlogs of orders.
In spite of stronger production, companies continued to lay off workers with the run of job cuts now stretching to four months.
While many manufacturers had to deal with higher costs for inputs, in many cases they were unable to pass them onto customers with profit margins coming under greater pressure, the survey said.
HSBC economist Agata Urbanska described the outlook for Czech manufacturing companies as “still challenging.” Growth in output is likely to continue in the first quarter, she said, but new orders are weak and the signs from the Czech Republic’s biggest single trading partner, Germany, are mixed. Domestic demand was likely to weaken further in the first half of the year, she added.
