Development of the industry - 1. quarter of 2008

Development of industry in Q1 2008 showed more moderate growth as for all indicators. Growing were: production, employment and labour productivity, compared to the corresponding period of the previous year. Compared with the Q4 2007 the growth rate of all these indicators was slower, an increase was recorded for wages and, in contrast, more marked drop was registered in orders. Non-domestic orders recorded a decrease, y-o-y.
The main factors of high industrial growth remained:
- growth at new production capacities, especially of foreign investors (mainly electrical engineering industry and industry of transport equipment and production of rubber and plastic products),
- strong foreign demand.


Industrial production

Industrial growth in total and its dynamics

The year-on-year industrial production index in Q1 2008 reached 105.7 %, and 106.8%, working days adjusted and 106.2 %, seasonally adjusted. Compared to the y-o-y production growth in Q4 2007 (index 106.2 %) the dynamics of industrial production growth slightly dropped.

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 2.5 percentage points, the branch grew by 19.2 %), 'manufacture of transport equipment' (contribution 2.0 p.p., growth by 9.0 %) and 'manufacture of machinery and equipment‘ (contribution 0.8 p.p., growth by 12.6 %). In contrast, industrial production decreased in 'food, beverages and tobacco' (contribution –0.3 p.p., decrease by 4.5 %), 'manufacture of textiles and textile products' (contribution –0.3 p.p., decrease by 10.8 %) and 'manufacture of wood and products of wood except furniture' (contribution –0.1 p.p., decrease by 5.2 %).

In Q1 2008, the industrial production increased in all leading industrial groupings: consumer durables ( 34.8 %), capital goods ( 9.7%), intermediate goods ( 3.3 %) and power production ( 2.5 %). In the leading industrial grouping a drop was recorded for consumer non-durables ( 4.8 %).


Sales

Growth and dynamics

Sales in industry at constant prices grew in Q1 by 5,2 %, year-on-year, working days adjusted by 6.3 % and by 6.0%, seasonally adjusted. At current prices, sales grew by 4.7%, year-on-year.

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 2.2 percentage points, the branch grew by 14.2 %), 'manufacture of transport equipment' (contribution 2.0 p.p., growth by 8.9 %), and 'manufacture of machinery and equipment' (contribution 1.0 p.p., growth by 12.4 %). Sales in industry decreased in 'food, beverages and tobacco' (contribution –0.3 p.p., decrease by 4.6 %), 'manufacture of textiles and textile products' (contribution –0.2 p.p., decrease by 11.1 %) and 'manufacture of basic metals and fabricated metal products' (contribution –0,1 p.p., decrease by 1.4 %).Direct export sales and sales of foreign-controlled enterprises

Direct export sales of industrial enterprises grew in Q1 2008 faster than sales in industry in total - by 5.9 % at constant prices and by 0.3 % at current prices. Their contribution to total sales of industrial enterprises made 48.4 % and compared to Q1 2007 it dropped slightly (from 50.5 %). The biggest growth at constant prices by volume of sales was recorded in 'manufacture of transport equipment' (by 7.3 %), 'manufacture of electrical and optical equipment' (by 8.9 %) and 'manufacture of machinery and equipment' (by 18.0 %).

Sales in industry implemented by foreign-controlled enterprises recorded a growth, too. They rose by 5.4 % (by 2.7% at current prices). Their share in total sales at current prices made 59.5% while compared with Q1 2007 it decreased (from 60.7%). 62.0% of sales of foreign-controlled enterprises was fed to direct exports.


Employment, wages and labour productivity

Employment

In Q1 2008, employment in industry increased, year-on-year, by 30.0 thousand persons, i.e. by 2.6 %. The average number of employees in industry was 1 187 thousand persons.

Employment increased most in the following industries: 'manufacture of rubber and plastic products' (by 9.6 %), 'manufacture of transport equipment' (by 7.6 %) and 'manufacture of machinery and equipment' (by 6.5 %) and employment dropped most in: 'electricity, gas and water supply' (by 10.2 %), 'manufacture of textiles and textile products' (by 7.1 %) and 'mining and quarrying of energy producing materials' (by 3.1 %).

Foreign-controlled enterprises employed 540.4 thousand persons, i.e. 45.5 % of the total number of employees in industry. Their share moderately increased compared with Q1 2007 when it stood at 45.2 %.

Besides the above number 47.9 thousand persons working in industrial organizations were employed by public employment offices and other companies, (y-o-y growth by 21.2 %) mostly in the following branches: 'manufacture of electrical and optical equipment' (13.0 thousand persons, growth by 29.5 %), 'manufacture of transport equipment' (11.0 thousand persons, growth by 5.7 %) and 'manufacture of basic metals, and fabricated metal products' (7.2 thousand persons, growth by 15.9 %).

Wages

In Q1 2008, average monthly wage in industry reached CZK 21 974 and was 11.3 % up, y-o-y. The highest level of wages was recorded for: 'manufacture of coke and refined petroleum products' (CZK 31 215), 'electricity, gas and water supply' (CZK 30 833) and 'mining and quarrying of energy producing materials' (CZK 27 881). The lowest wage level was in: 'manufacture of leather and leather products' (CZK 13 620), 'manufacture of textiles and textile products' (CZK 14 525) and manufacturing n.e.c (CZK 17 521). The biggest growth was recorded in 'electricity, gas and water supply' (by 19.3 %), 'mining and quarrying of energy producing materials' (by 17.0 %) and 'manufacture of coke and refined petroleum products' (by 14.3 %).

Average wage in foreign-controlled enterprises was CZK 24 116, i.e. by 9.7 % more than average wage in the industry in total. It grew, year-on-year, by 10.7 %.

Labour productivity

Labour productivity in industry grew by 1.9% in Q1 2008.


New orders

New orders (total)

In Q1 2008, new orders were signed in selected industries and their volume increased by 1.1%, year-on-year. The growth was most contributed to by 'manufacture of radio, television and communication equipment and apparatus' (contribution 2.0 p.p., growth by 42.3 %), 'manufacture of machinery and equipment' (contribution 1.2 p.p., growth by 9.9 %) and 'manufacture of metal structures and fabricated metal products' (contribution 0.8 p.p., growth by o 10,5 %). A drop of new orders was ascertained in 'manufacture of motor vehicles, trailers and semi-trailers' (contribution -1.6 p.p., drop by 5.3 %), 'manufacture of basic metals and fabricated metal products' (contribution –0,9 p.p., drop by 7.1 %) and 'manufacture of office machinery and computers' (contribution –0.9 p.p., drop by 13.2 %).

Non-domestic new orders

In Q1 2008, non-domestic new orders signed in selected industries dropped by 3.9%, y-o-y. Decrease in the number of non-domestic new orders was recorded in: 'manufacture of basic metals and fabricated metal products' (contribution –2.2 p.p., drop by 23.7 %), 'manufacture of motor vehicles, trailers and semi-trailers' (contribution –2.1 p.p., drop by 6.4 %) and 'manufacture of office machinery and computers' (contribution –1.8 p.p., drop by 36.7 %). Increases in the number of new non-domestic orders was ascertained in: 'manufacture of radio, television and communication equipment and apparatus' (contribution 2.1 p.p., growth by 34.3 %), 'manufacture of machinery and equipment' (contribution 1.3 p.p., growth by 10.1 %) and 'manufacture of medical, precision and optical instruments, watches and clocks' (contribution 0.6 p.p., growth by 25.6 %).


The biggest drop was recorded in manufacture of textiles and textile products

In Q1 2008, 'manufacture of textiles and textile products' ranked among industries showing the biggest drop (contribution to the industry in total –0.3 p.p.). The y-o-y industrial production index reached 89.2 % while the two digit y-o-y decline was recorded in this industry for the third quarter in a row. After a temporary revival in Q1 and Q2 2007 the subsection 'manufacture of textiles and textile products' resumed its long-term trend .

The drop of production responds to the development of sales which dropped by 11.1% at constant prices and by 13.8 % at current prices. Direct imports sales dropped compared with Q1 2007 by 13.0% at constant prices and by 16.8% at current prices. The share of 'manufacture of textiles and textile products' in total direct export sales made 2.1% at current prices while compared with Q1 2007 it dropped (from 2.5%).

In Q1 2008, employment decreased by 4 047 persons, i.e. by 7.1 %, y-o-y. In the long-term run, the average monthly wage ranks among the lowest in industry. In Q1 2008, it reached CZK 14 525, i.e. 66.1% of the average monthly wage in industry in total and is by more than a half less compared to the branch where the biggest average wage was recorded ('manufacture of coke and refined petroleum products').

Declines are observed in the volume of orders. The volume of new orders dropped in 'manufacture of textiles and textile products' (contribution –0.3 p.p., drop by 13.2 %) and in 'manufacture of wearing apparel; dressing and dyeing of fur' (contribution –0.2 p.p., drop by 48.2 %). The volume of non-domestic orders in 'manufacture of textiles and textile products' was lower (contribution –0.6 p.p., drop by 24.8 %) and in 'manufacture of wearing apparel; dressing and dyeing of fur' (contribution –0.3 p.p., drop by 54.5 %).