Development of the industry - 1. quarter of 2007

Development of the industry in the Q1 2007 was highly dynamic as for all indicators. Growing was: production, employment, labour productivity as well as volumes of new orders, compared to the corresponding period of the previous year. The main factors of high industrial growth were:
- growth at new production capacities, especially of foreign investors (mainly electrical engineering industry and industry of transport equipment),
- revitalization in the branch of power engineering,
- strong external demand.

In Q1 2007, there was 1 working day less in comparison with Q1 2006.


Industrial production

Industrial growth in total and its dynamics

The year-on-year industrial production index in Q1 2007 reached 112.4% (113.1%, working days adjusted and 112.2%, seasonally adjusted). It is the second highest growth in time series since 2000 immediately after Q1 2006, when the industrial production index was 114.8%. Compared to the y-o-y production growth in Q4 2006 (index 107.8%) the growth of industrial production increased. The increase was also recorded for q-o-q change of the trend (seasonally adjusted).

Development of individual branches and main industrial groupings

The following contributed most to the growth of industrial production: ‘ manufacture of electrical and optical equipment‘ (its contribution to the industrial growth in total was 3.4 percentage points, the branch grew by +28.8%), ‘manufacture of transport equipment‘ (contribution of +2.8 p.p., the branch grew by +12.9%) and ‘manufacture of machinery and equipment‘ (contribution of +1.6 p.p., growth by +26.3%). In contrast, the industrial production decreased in ‘ electricity, gas and water supply‘ (contribution of -0,4 p.p., decrease by -4.7%), which was mainly affected by non-standard weather conditions in winter. The drop was recorded also for ‘mining and quarrying of energy producing materials‘ (contribution of -0.1 p.p., drop by -4.1%) and ‘manufacture of leather and leather products‘ (contribution of -0,01 p.p., drop by -3.7%).

In Q1 2007, industrial production increased in the following main industrial groupings: consumer durables (+26.8%), capital goods (+17.7%), intermediate goods (+12.2%), consumer non-durables (+5.6%) and in the main industrial grouping of power production (+2.1%).


Sales

Growth and dynamics

In Q1 2007, sales in the industry were higher by +13.4% year-on-year (constant prices), after working days adjustment it was +14.3%, and seasonally adjusted +13.5%. At current prices the sales rose y-o-y by +14.8%.

The following contributed most to the growth of sales in industry: ‘ manufacture of electrical and optical equipment‘ (contribution to the industrial growth in total was 3.6 percentage points, the branch grew by +23.9%), ‘manufacture of transport equipment‘ (contribution of +2.9 p.p., growth by +12.9%), and ‘manufacture of machinery and equipment‘ (contribution of +1.9 p.p., growth by +26.3%). Sales in industry decreased in: ‘ electricity, gas and water supply‘ (contribution of -0,4 p.p., drop by -5.1%), ‘mining and quarrying of energy producing materials‘ (contribution -0.04 p.p., drop by -2.4%), and ‘manufacture of leather and leather products‘ (contribution -0,01 p.p., drop by -3.6%).

Changes in structure due to sales

In Q1 2007, from among individual subsections the highest share was attributed to ‘ manufacture of transport equipment‘ (19.3% in sales in industry for the branch in total), ‘manufacture of electrical and optical equipment‘ (14.3%) and ‘manufacture of basic metals and fabricated metal products‘ (12.9%). Compared to Q1 2006, the most significant increase was recorded for ‘ manufacture of electrical and optical equipment‘ (from 13.0% up to 14.3%), the most significant drop showed ‘electricity, gas and water supply‘ (from 9.6% to 8.5%) and ‘manufacture of machinery and equipment‘ (from 20.0% to 19.3%).

Direct export sales and sales of foreign-controlled enterprises

Direct export sales of industrial enterprises increased more than sales in industry in total (+19.4% at constant prices, +20.9% at current prices). Their share in total sales of industrial enterprises (at current prices) stood at 51.3% and compared to Q1 2006 it increased (from 47.7%). The biggest growth at constant prices by volume of sales was recorded in ‘manufacture of electrical and optical equipment‘ (by +27.3%), ‘manufacture of machinery and equipment‘ (by +26.5%) and ‘manufacture of transport equipment‘ (by +17.4%).

Sales in industry implemented by foreign-controlled enterprises recorded above-the-average growth. They rose by +17.4% (at constant prices) and by +19.2% (at current prices). Their share in total sales at current prices stood at 61.2% while compared with Q1 2006, it grew (from 59.0 %). 64.3% of sales of foreign-controlled enterprises were fed to direct exports.


Employment, wages and labour productivity

Employment

In Q1 2007, employment in industry increased, year-on year, by 31.2 thousand persons, i.e. by +2.8%. The average number of employees in industry was 1,161 thousand persons.

Employment increased most in the following industries: ‘ manufacture of rubber and plastic products‘ (+7.9%), ‘manufacture of transport equipment‘ (+7.8%) and ‘manufacture of electrical and optical equipment‘ (+7.4%). Employment dropped most in: ‘manufacture of textiles and textile products‘ (-6.6%), manufacture of leather and leather products (-6.5%) and ‘mining and quarrying of energy producing materials‘ (-5,3%).

Foreign-controlled enterprises employed 522.5 thousand persons, i.e. 45.0 % of the total number of employees in industry: Their percentage increased compared to Q1 2006 when it stood at 41.3%.

Besides the above number 39.2 thousand working in industrial organizations were employed by public employment offices and other companies, mostly in the following branches: ‘manufacture of transport equipment‘ (10.4 thousand persons), ‘manufacture of electrical and optical equipment‘ (10.0 thousand persons) and ‘manufacture of basic metals and fabricated metal products‘ (5.8 thousand persons).

Wages

In Q1 2007, average monthly wage in the industry reached CZK 19,679 and was 7.7% up, y-o-y.

The highest level of wages was recorded for: ‘ manufacture of coke and refined petroleum products‘ (CZK 27,306), ‘electricity, gas and water supply‘ (CZK 25,640) and ‘mining and quarrying of energy producing materials‘ (CZK 23,810). The lowest level of wages was in: ‘manufacture of leather and leather products‘ (CZK 12,963), ‘manufacture of textiles and textile products‘ (CZK 13,273) and ‘manufacture of wood and wood products‘ (CZK 15,691). The most significant growth was recorded for ‘other mining and quarrying‘ (by 11.4% to CZK 21,780), ‘manufacture of other non-metallic mineral products‘ (by 9.7% to CZK 20,361) and ‘mining and quarrying of energy producing materials‘ (by 9.6%).

Average wage in foreign-controlled enterprises was CZK 21,665, i.e. 10.1% more than average wage in the industry in total. It grew, year-on-year, by 6.6%.

Labour productivity

In Q1 2007, labour productivity in industry increased by 9.6% and grew faster than average monthly nominal wage.


New orders

New orders (total)

In Q1 2007, new orders were signed in selected industries and their volume was CZK 483.1 billion, which was + 11.6% up compared to Q1 2006. The growth was most contributed to by: ‘manufacture of office machinery and computers‘ (contribution of +2,5 p.p., growth by +45,6%), ‘manufacture of electrical and optical equipment‘ (contribution of +1.9 p.p., growth by +21.0%) and ‘manufacture of machinery and equipment‘ (contribution of +1.8 p.p., growth by +14.6%). Drop of new orders was recorded for ‘manufacture of radio, television and communication equipment‘ (contribution of -0.2 p.p., drop by -3.1%).

New non-domestic orders

In Q1 2007, new non-domestic orders worth CZK 323.5 billion were signed which was +14.9% up compared to Q1 2006. Increases in the volume of new non-domestic orders were ascertained in: ‘manufacture of basic metals and fabricated metal products‘ (contribution of +3.8 p.p., growth by +52.2%), ‘manufacture of office machinery and computers‘ (contribution of +3.3 p.p., growth by +96.6%), and ‘manufacture of machinery and equipment‘ (contribution of +1.9 p.p., growth by +14.1%). New non-domestic orders decreased in ‘manufacture of radio, television and communication equipment‘ (contribution of -0.6 p.p., decrease by -7.6%).


The most dynamic industry: Manufacture of electrical and optical equipment

In Q1 2007, ‘ manufacture of electrical and optical equipment‘ ranked among the industries showing the most dynamic growth, which also significantly affected total results in industry (contribution to the industry in total +3.4 p.p.). The industrial production index y-o-y reached 128.8%, 129.1% working days adjusted and 129.6%, seasonally adjusted. It was the third best result in time series (after Q4 2002, when it reached 139.6% and Q3 2004 when it stood at 135.7%). Compared to y-o-y growth of production in Q1 2006 (index 123.9%) the growth of the above industry increased and so did the quarter-on-quarter change of trend, seasonally adjusted.

The total growth of industrial production in subsection ‘manufacture of electrical and optical equipment‘ was most contributed to by division ‘manufacture of electrical machinery and apparatus‘ (contribution to the growth of subsection of +11.8 p.p., growth by +26.6%), ‘manufacture of office equipment and computers‘ (contribution of +10.2 p.p., growth by +71.8%), ‘manufacture of radio, television and communication equipment‘ (contribution of +3.9 p.p., growth by +12.9%) and ‘manufacture of medical, precision and optical instruments, watches and clocks (contribution of +2.9 p.p., growth by +25.8%).

The growth of production responded to the sales growth, which was, year-on-year, +23.9%, at current prices +25.9%.

Direct export sales in subsection ‘manufacture of electrical and optical equipment‘ increased compared to Q1 2006 by +27.3% at constant prices and by +29.2% at current prices. Their share in total direct export sales (at current prices) stood at 19.1%.

In Q1 2007, employment in subsection ‘manufacture of electrical and optical equipment‘ increased, year-on-year, by 10,965 persons, i.e. by +7.4%. Average monthly wage reached, in Q1 2007, CZK 18,824 and was year-on-year, +6.5% up.

In Q1 2007, in subsection ‘manufacture of electrical and optical equipment‘ new orders worth CZK 114.3 billion were signed. The year-on-year growth was recorded especially for division ‘manufacture of office equipment and computers‘ (by 45.6%), ‘manufacture of medical and surgical equipment and orthopaedic appliances‘ (by +32.2%) and ‘manufacture of electrical and optical equipment‘ (by +21.0%).

In Q1 2007, in subsection ‘manufacture of electrical and optical equipment‘ new non-domestic orders worth CZK 78.3 billion were signed. Rapid growth was recorded especially for division ‘manufacture of office equipment and computers‘ (by +96.6%), ‘manufacture of medical, precision and optical instruments, watches and clocks‘ (by +35.0%) and ‘manufacture of electrical and optical equipment‘ (by +17.3%).