PRAGUE: Czech industrial production fell 1.4% year-on-year in August, sliding for the first time since February as global chip shortages slashed auto production.
Signs point to a slowing manufacturing recovery in the Czech Republic and other central European countries, with global shortages amid supply chain problems and rising costs weighing on growth.
This is most clearly seen in the region’s auto sector where factories have occasionally had to idle due to the shortage of chips to supplement vehicles.
Data from the Czech statistics office on Thursday showed a sharp drop in auto production in August, and the office said unexpected extended vacations in the sector contributed to the drop in production.
The industry’s overall decline comes after revised growth of 6.8% in July. Analysts polled by Reuters had expected production to rise 2.6% in August.
However, industrial production in July and August – when factories schedule annual summer breaks and which can cause production to fluctuate – grew nearly 3% year-on-year.
“It’s no surprise that the biggest drag on the industry in August was the auto factories,” said Michal Brozka, senior economist at Komercni Banka.
“It is not good to draw big conclusions from the developments of the summer months.
“Nonetheless, companies still see a shortage of materials and components. And in the coming months, we can expect unstable development as well as slower average growth.”
The Czech Automobile Association reported in September that auto production fell 39% year-on-year in July and August.
Toyota’s Czech plant was temporarily shut down last month due to shortages, while the country’s largest exporter, Volkswagen Group Skoda Auto, shut down production plants in the past week. of the month.
The disturbances in the automotive sector were also manifested in the foreign trade figures in August, the balance showing a larger deficit than expected, said Thursday the statistics office.