The Czech manufacturing PMI index compiled monthly by the market intelligence company S&P Global Market Intelligence posted 52.8 in March, the best result since April 2022.

It is also the first time since spring 2022 when the manufacturing index stayed on or above the 50 point mark separating growth and decline for two consecutive months after posting 50.0 in February.

"March PMI data signalled an upturn in the Czech manufacturing sector’s health as demand conditions proved fruitful at the end of the first quarter,” commented Siân Jones, principal economist at S&P Global Market Intelligence.

“Output grew sharply amid renewed growth in new orders and new export business,” she added, while also noting that “although year-ahead expectations were buoyant, customer demand improvements were not sufficient to counterbalance cost considerations towards hiring as employment fell again”.

The growth rate was at its fastest since January 2022 as Czech companies reported the much sought rebound in demand from European customers.

Domestic as well as international demand improved, prompting expectations of further growth, but the rising cost input and supply-chain instability in connection with the war in the Middle East cooled the otherwise more positive outlook.

S&P reported stockpiling recorded among respondents, “while vendor performance declined to the largest extent since July 2022,” and more staffing cuts among manufacturers were also reported, running for the third month in March though at a slower rate.

“Higher energy and oil costs led to the fastest rise in input prices since October 2022,” S&P wrote, and issues with sea freight prompted companies to stockpile in anticipation of further supply disruptions.

The rate of costs increase “was well above the long-run series average and was the steepest since October 2022,” and the rate of selling price inflation was also strong though moderated by companies' efforts to stay competitive.

Although the confidence among respondents rose to the highest in four years, Jones concluded that "underlying data indicated that headwinds from the war in the Middle East were felt, as supplier performance declined notably and input costs soared”.