INSTANT VIEW 2-Czech Aug output falls, jobless rises

PRAGUE, Oct 8 (Reuters) - Czech industrial output fell in August and unemployment ticked higher in September, data showed on Monday, raising fears of a fourth straight quarter of contraction and indicating government austerity measures are deepening the economic downturn.

A fall in the production of electronics production helped push output down 3.1 percent on an annual basis in August, undershooting market expectations of a 0.5 percent increase.

The stats office said the data had been affected by some factories shifting summer holidays to August rather than hold them in their usual period in July. New orders fell 1.4 percent, but domestic orders fell much faster than export orders, indicating government belt-tightening was squeezing Czech consumers even as the euro zone crisis hit demand from abroad.

In other data, the Labour and Social Affairs Ministry said the unemployment rate rose 8.4 percent in September, above expectations for 8.3 percent.

Foreign trade also posted a 16.9 billion crown ($887.65 million) surplus in August, just above the median analysts' forecast of 15.75 billion.

The office also released foreign trade data adjusted for transactions by non-residents showing a deficit of 2.1 billion crowns, down from a revised 3.62 billion surplus last month.

The new methodology looks at a change in ownership of goods between residents and non-residents instead of taking into account the cross-border move as the point where international trade is conducted. It is calculated on the basis of value-added, or sales, tax reports. ************************************************************** KEY POINTS: INDUSTRIAL OUTPUT (y/y change in pct) Aug July Aug fcast Industrial output -3.1 4.2 0.5 Industrial sales -0.7 5.8 n/a FOREIGN TRADE (in bln CZK) Aug July Aug fcast balance 16.90 24.33(25.85) 15.75

(nominal y/y change in pct)

exports 7.9 11.1 (10.3) 6.4 imports 0.8 5.8 (4.2) 2.2


balance -2.08 3.62(5.94) -1.80 CZECH UNEMPLOYMENT Sept Aug Sept fcast pct of workforce 8.4 8.3 8.3

Details of August industrial output data.......

Details of August foreign trade data...........

Details of September jobless data..............



"It (industrial output) is an unpleasant number and it deteriorates expectations for third quarter GDP."

"If we look at it as a whole, including construction and unemployment, there is a negative surprise in all the numbers.

"The state of the economy is markedly deteriorating and fulfilling the central bank's outlook. This increases the likelihood that the central bank will revise its outlook downward in November and maybe will try to cut interest rates one more time."


"The rise in unemployment... was mainly due to an entry of graduates on the labour market.

"The unfavourable macroeconomic situation should reflect in a further increase in the unemployment rate while the end of the year is traditionally negatively affected by a reduction of seasonal jobs.

"We estimate the rate at 9.2 percent at the end of this year."


"August data on Czech industrial output are disappointing, certainly if compared to market expectations."

"However, as we noted already last month on the July data that were better than expected: it seems that seasonal factors (company holidays) might have impacted activity in Czech industry in a positive way in July but in a negative way in August."

"We think that this is certainly part of the explanation of the weak reading for August.

"On top of that, however, new orders were also very weak in August, which reminds us that the overall performance of Czech industry seen in August was not only about seasonality but that it corresponds also to weak demand both in major export destinations as well as in the domestic economy."

"Foreign trade again shows a very nice surplus with strong year-on-year improvement (of the surplus)."

"Exports came pretty in line with our expectations and they are not performing that badly when situation in the Eurozone is taken into account."

"However, the data published today can be hardly interpreted as good news for the Czech crown. Nevertheless, we think that the market should not overestimate the weakness seen in industrial statistics: yes, the general trend remains weak for now but there was significant impact of seasonality on July and August data."

KEY DETAILS: INDUSTRIAL OUTPUT - Overall new orders fell 1.4 percent year-on-year on a 3.0 percent drop in domestic orders and a 0.5 percent dip in orders from abroad. - Construction output, measured by a separate index, fell by 4.7 percent year-on-year in August after a 0.5 percent drop the month before. FOREIGN TRADE - The trade balance surplus was at 16.90 billion crowns in August, from a revised 24.33 billion in July. - In euro terms, exports rose 4.7 percent and imports fell by 2.2 percent.


- Market expectations before release

- Slovak July trade figures - August consumer inflation

- August producer prices figures

- Report on last Czech rate decision......


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($1 = 19.0391 Czech crowns)

(Reporting by Mirka Krufova; and Jana Mlcochova)

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