Czech industry is growing again

Czech industry showed clear signs of life in March. The Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 52.8 points, reaching its highest level in four years.

After registering 50.0 in February, the index is now at or above the growth threshold for the second consecutive month. For Czech industry, this is more than just a statistical improvement: it is the clearest signal yet that the sector is stabilizing again after a long period of weakness.

The increase was driven primarily by stronger production, new orders, and a revival in export business. Many companies reported noticeably improved demand from Europe. This not only improves the current business situation but also the outlook for the coming months.

However, the picture is not entirely rosy. Despite growing demand, manufacturers continued to cut staff—albeit at a slower pace than before. Apparently, the recovery has not yet been sufficient to justify the higher costs of new hires.

Added to this is new cost pressure. Rising energy and oil prices caused purchasing costs to rise more sharply than at any time since fall 2022. At the same time, supplier performance deteriorated significantly. Many companies responded by building up inventories to protect themselves against further disruptions in the supply chains.

Selling prices also rose, albeit not to the full extent. Many companies sought to maintain their competitiveness and passed on only part of the increased cost pressure.

All in all, however, cautious optimism prevails. Sentiment in the industry is better than it has been in four years. But the recovery remains fragile: external risks, higher input costs, and fragile supply chains could quickly put the brakes on the upswing again.