The beginning of the new month brought two traditionally first sets of data from the Czech economy, namely a new index of purchasing managers in industry and, in addition, the result of the state budget. The current significant decline in the PMI in Czech industry from 58 in September to 55.1 points may not surprise anyone much given the situation. For a long time now, there have been reports from the corporate sector about the lack of components affecting the automotive industry in particular, which in our case represents approximately 10% of the entire economy, including related industries.
In addition, industrial companies continue to have to deal with high commodity (including energy) and transport prices, which are increasingly reflected in their sales prices. The continuing negative supply shock therefore continues to affect the functioning of the largest domestic industry – it interferes with its overall performance and now, according to a new survey, also in orders. The sum total, the current PMI, failed, but it still ended with conditions at a fairly solid level.
The second interesting issue from Monday was the result of the state budget for the first ten months of the year. The deficit in this period climbed to a record -335 billion crowns and was thus 61 billion higher than in the same period last year. And this is certainly not a positive result, given last year’s economic downturn contrasting with this year’s recovery. On the other hand, this number is not so surprising in view of the rapidly growing mandatory expenditures or the loss of income after the abolition of the super-gross wage.
It is the latter change leading to a shift in the budgetary determination of taxes quite complicates the year-on-year assessment of the development of tax revenues in the state budget, so the simple quick assessment of the development of the revenue side of the budget is quite skewed. If we think about all last year’s indulgences and postponements or shifts of tax rates, it is basically almost impossible and one short paragraph would certainly not be enough to explain. Therefore, only by telegraph, there is a good chance that the budget will end up significantly better than planned. The deficit could thus be around 400 billion at the end of the year instead of the planned 500.
Author: Jan Bureš & Petr Dufek , Patria Finance
