Illustrative stock photo (source: Sme)
The beginning of the year was positive in terms of industrial production which rose by 7.6 percent year-on-year in January. This was mostly the result of the growth in mining and quarrying by 19.1 percent; electricity, gas, steam and air-conditioning supply by 14.2 percent; and in manufacturing by 6.3 percent, according to the Statistics Office data.
“Though the index does not include heat deliveries, that increased due to the freezing winter, the weather probably also impacted higher supplies of electricity and gas,” Ľubomír Koršňák, analyst with UniCredit Bank Czech Republic and Slovakia, wrote in a memo.
Moreover, the processing industry continued growing in the beginning of 2017, despite the relative slower performance of the automotive industry that announced several halts to production at the end of last year due to the preparation of lines for new production, Koršňák added.
The dynamics of annual growth in production accelerated from the revised 5.8 percent to 7.6 percent.
After seasonal adjustment, monthly industrial production rose by 0.7 percent in January, while production in industry for the last year was revised to 4.7 percent, up from 3.3 percent, Katarína Muchová, analyst with Slovenská Sporiteľňa, wrote in a memo.
As for the specific groupings of the industrial sector that influenced the increase in annual industrial production, the most significant growth was recorded in the manufacture of basic metal and fabricated metal products (except machinery and equipment) by 16.5 perent; electricity, gas, steam and air-conditioning supply by 14.2 percent; manufacture of machinery and equipment n.e.c. by 18.5 percent; manufacture of transport equipment by 3.2 percent; and manufacture of food, beverages and tobacco products by 17.3 percent.
Total production was affected by a decrease in the manufacture of computer, electronic and optical products by 18.6 percent; manufacture of wood, paper products and printing by 4.6 percent; and in manufacture of chemicals and chemical products by 2.9 percent.
In terms of the main industrial groupings, an increase was recorded in production related to energy by 13.5 percent y/y; production of non-durable consumer goods by 12.4 percent y/y; production of intermediate goods by 10.4 percent y/y; and in production of investment goods by 4.8 percent y/y. Production of durable consumer goods was lower by 10.6 percent y/y, according to the statistics.
Meanwhile, the sentiment in Slovak industry is favourable and rose for the third month in a row in February, according to Muchová.
Koršňák adds that it even achieved its six-year maximum, while the expectations of industrial companies in Slovakia for the future were the highest since May 2005.
“We thus expect that Slovak industry will keep increasing in the following months,” Koršňák wrote in the memo, adding that due to Easter it may be especially strong in March.
There are, however, also certain risks, especially in connection with Brexit and its potential impact on the euro and sentiment, as well as the geopolitical development and potential return of protectionism in big global economies, Muchová warned.
