Czech Manufacturing Sector Stabilizes

The Czech Manufacturing PMI edged up to 50 in February 2026 from 49.8 in January, but below market expectations of 50.4. Production expanded at the fastest pace in four years; however, underlying data pointed to ongoing challenges in demand and rising cost pressures. New orders fell for the second consecutive month amid weaker sales environment and heightened competition. Consequently, firms reduced employment and scaled back input purchases. Capacity constraints led to another rise in backlogs of work, marking the steepest increase in four years. At the same time, shortages of key materials, including metals, drove vendor performance to deteriorate at the joint-fastest rate since November 2024. On the price front, input cost inflation eased slightly but remained elevated, while output prices rose at the fastest pace in three years. Despite these pressures, manufacturers’ confidence in output growth over the coming year strengthened, with optimism reaching a four-year high.

The Czech Manufacturing PMI slipped to 49.8 in January 2026 from 50.4 in the previous month, returning to contraction and missing market expectations of 50.6. The slowdown was driven by a renewed fall in new orders amid weak domestic and export demand, particularly from Germany, and tough global competition. Employment and purchasing activity declined as firms cut costs, while inventories fell due to stock optimisation. Despite softer demand, output rose at the fastest pace since February 2022, supported by efforts to clear backlogs, which increased for the first time in three months. Inflationary pressures intensified, with input costs rising at the sharpest pace in three years on higher supplier, raw material, and carbon-related certification costs, prompting firms to raise selling prices at the steepest rate since February 2023. Nonetheless, business confidence climbed to its highest level since June 2025, supported by expectations of stronger demand and planned tech investment.

The S&P Global Czechia Manufacturing PMI rose to 50.4 in December 2025 from 48 in November, beating market expectations of 48, and ending a five-month contraction. This marked the strongest reading since May 2022, driven by renewed increases in new orders, production, and employment, supported by firmer domestic and export demand. Employment expanded for the first time in 39 months, helping reduce order backlogs. On prices, input price inflation accelerated to the fastest since May, driven by higher metals and material costs, while output price growth softened amid foreign competition. Firms slowed cuts to input buying, inventories continued to fall, and supplier delivery times lengthened. Business confidence rose to a three-month high, supported by export expansion, despite lingering concerns over subdued demand conditions.