Summary of economic news released by SITA on Monday, July 10
Petrol Prices Grew about SKK 1 by July 3
As of July 3 the average retail price of 91- octane petrol in Slovakia was SKK 42.13 per liter and thus compared with June 20 it rose by SKK 0.57. The Slovak Statistics Office reported that the price for the 95-octane petrol grew SKK 0.58 to SKK 42.15 as of July 3. The price for 98-octane petrol increased by SKK 1.09 from June 20 to SKK 45.29. The average retail price of one liter of diesel was SKK 41.36, which is SKK 0.42 more than on June 20, 2006. The average retail price of LPG fell SKK 0.23 to SKK 21.83 as of July 3, spokeswoman of the Slovak Statistics Bureau Eva Kelemenova informed.
Sales in Industry in Slovakia Up 13.8 Pct. y/y in May
Industry sales in Slovakia went up by 13.8 percent y/y in fixed prices to SKK 150.2 billion in May. This development was largely influenced by a 15.9-percent increase in industrial manufacturing sales, while sales in the mining sector fell 18 percent and the drop in sales for electricity, natural gas and water production and distribution was 3.6 percent. Five-month sales in industry were 10.5 percent higher than a year ago. Of this, industrial manufacturing sales rose 12.8 percent y/y. Sales in the mining industry declined 1.5 percent and sales for electricity, natural gas and water production and distribution shrank 3.9 percent y/y, the Slovak Statistics Office informed SITA on Monday.
May Employment Growth Was Highest in Wholesale Businesses
In May, the highest pace of employment growth was achieved in the wholesale business, reporting a y/y increase of 13.5 percent. According to the Slovak Statistics Office report the number of employees in the motor vehicle sale and maintenance sector went up by 10.3 percent, in the building industry by 9.8 percent, and in hotels and restaurants by 8.8 percent. The increase accounted for 8.3 percent in the retail sector and 3.8 percent in the sector of real estate, rent, and other public services. On the other hand employment continued decreasing in industry going down 2.7 percent y/y. The transport sector reported a 1.8-percent drop in labor force, telecommunications services 0.8 percent and postal services posted 0.5 percent.
Nominal Wages Up in Slovakia in All Branches in May
Average nominal monthly wages in May were higher than a year ago in all selected branches of the economy in Slovakia. Nominal wages grew the most in the car sale and maintenance sector, where it rose 12.9 percent. Nominal wages rose 10.9 percent in the retail sector, 9.9 percent in the transport sector, 9.1 percent in the sector of real estate, rental, trade activities and other services, 9 percent in industry, 7.8 percent in hotels and restaurants, 6 percent in the telecommunications sector and 5.1 percent in the wholesale business. Nominal wage growth reached 4.6 percent in the building industry and it was 3.1 percent in the postal service sector. The Slovak Statistics Office reported this wage data on Monday
Antitrust Office Levies an SKK 75 Mln. against ZSSK Cargo
Railway cargo company Zeleznicna Spolocnost Cargo Slovakia, a.s. (ZSSK Cargo) was handed down another fine from the Antitrust Office (PMU). PMU spokesman Miroslav Jurkovic said the SKK 75 million fine was levied for abusing its dominant market position. ZSSK Cargo withdrew from price agreements with forwarding companies in charge of railway transportation for cement producer Holcim (Slovensko), a.s. As a result of this the company was forced to terminate cooperation with the transporter LTE Logistic and Transport Slovakia, s.r.o.
Robert Fico Claims SMER-SD Insists on Major Revision of Tax Reform
Election winner and the strongest party of the newly formed ruling coalition SMER-Social Democracy (SMER-SD) did not give up its efforts to principally revise tax reform. "I guarantee there will be two VAT rates in Slovakia as of January 1, 2007," said SMER-SD leader Robert Fico in the "In Politics" discussion program on the TA3 news channel on Sunday evening. The new government will also increase income tax on banks and monopolies. SMER-SD will not abandon progressive taxation of private individuals, whose concrete form will depend on agreement with coalition partners. Mr. Fico thus responded to statements by Finance Minister Jan Pociatek who indicated that the new government might give up some tax interventions announced before the elections.
Total Revenues of Vahostav-SK Increased by 70 Percent in 2005
Construction company Vahostav-SK, Zilina, a.s. posted total revenues of SKK 3.448 billion in 2005, which is 70 percent more than in 2004. Output increased by 84 percent to SKK 3.133 billion on a nearly 90-percent increase in production costs to SKK 2.492 billion. The firm generated added value of SKK 643.5 million. The company closed last year with a taxed profit of SKK 83.4 million, when operating profit reached SKK 140.4 million and the loss from financial operations and extraordinary activities amounted to SKK 35 million.
Flughafen Wien Expects Antitrust Office to Okay Airport Privatization
Vienna airport operator Flughafen Wien is convinced that the Slovak Antitrust Office (PMU) will approve the privatization of the Bratislava and Kosice airports. "We have a valid contract signed by both parties and are currently awaiting the Antitrust Office to deliver its decision," stated the company's spokesman. Flughafen Wien thus responded to Prime Minister Robert Fico, who stated that his government will step into the privatization process and scrap the contract if possible. The Vienna airport spokesman further stated that the company is aware of possible political pressure being exerted on regulatory authorities; Flughafen Wien however still expects the transaction to be approved. Newly appointed Transport Minister Lubomir Vazny is taking a cautious stance with respect to the airports' privatization, stating shortly after being installed in office last week that the ministry is planning to review the contract on the sale of the state's share in both airports. The minister particularly considers the contract's investments terms as problematic.
In 2005, Slovak Crown Strengthened by 2.44 Pct. toward the Euro
The exchange rate of the Slovak crown against its referential currency the euro gained 2.44 percent towards the euro last year. At the end of last year the exchange rate represented 37.848 SKK/EUR, while at the end of 2004 it stood at 38.796 SKK/EUR. The average exchange rate was 38.593 SKK/EUR, up 3.6 percent y/y, reads the 2005 annual report elaborated by the National Bank of Slovakia (NBS).
Saint-Gobain Sekurit SR Posted SKK 389.4 Mln. Sales Last Year
Saint-Gobain Sekurit SR, s.r.o. based in Lozorno, whose main business is buying, selling and fitting windshields and car windows, reported total sales of SKK 389.4 million last year, down 14.4 percent y/y. Revenues from goods sold made up the biggest amounts of total sales, slightly dropping 0.1 percent to SKK 335.3 million y/y. Cost of sales amounted to SKK 339.9 million, up SKK 10.4 million from 2004, reads data released by the company in the Commercial Bulletin.
MONEY MARKET: Auction of 20-Year Government Bond Fails on Monday
An auction of the second tranche of twenty-year government bonds failed on Monday. Tatra Banka dealer Milan Cavojec stated that bank bids in the auction totaled SKK 3.1 billion. However, the Finance Ministry's Debt and Liquidity Management Agency (ARDAL) rejected them all. An interesting fact is that nonresident bids in the auction made up SKK 2 billion, added the dealer. Banks asked for yields from 5.49 percent p.a. to 5.7 percent p.a. Demand in the auction of the first tranche of these government bonds in May reached SKK 9.39 billion and the agency accepted SKK 5.44 billion. Yields then ranged from 4.23 percent p.a. to 4.64 percent p.a.
STOCK MARKET: BCPB Gains 0.61 Pct. at Beginning of the Week
The official SAX share index improved by 2.27 points or 0.61 percent at the beginning of this week. VUB bank shares pushed up the SAX index to 376.81 points. Turnover on the Bratislava Stock Exchange (BCPB) increased from SKK 664 million on Friday to SKK 1.206 billion on Monday with just SKK 673,000 inn share trading.
FOREX MARKET: Crown Loses Five Hallers Against Euro on Monday
The Slovak crown lost about five hallers against its referential currency the euro on Monday. VUB bank dealer Ladislav Benedek stated that development on surrounding markets in the region as well as the local political situation were behind the crown's weakening. The exchange rate of the crown against the euro opened at 38.400/38.420 SKK/EUR and represented 38.450/38.460 SKK/EUR before the close of trading. Foreign investors were selling crowns, but on the whole trading on Monday was calm.
PSS Provided SKK 7.2 Bln. Funding for Housing Purposes in H1 2006
Slovakia's largest home savings bank Prva Stavebna Sporitelna (PSS) provided SKK 7.2 billion for housing purposes in the first six months of the year. This is by 1.3 billion more than a year ago. Board of directors' member Erich Feix informed that PSS has provided SKK 127.8 billion in funding for housing purposes since the beginning of its operations. Of this, SKK 69.8 billion was used to finance home renovation, SKK 34.5 billion was used for purchase of existing homes and SKK 20.8 billion for new housing construction. The remaining SKK 2 billion were used for other housing purposes.
Rising Retail Sales Indicate Higher Household Spending
Rising retail sales, up 9.3 percent y/y in May and accelerating from 8.6 percent in April, indicates that the Q2 household consumption growth could be even higher than in the first three months of this year, stated ING analyst Eduard Hagara. These estimations are also supported by a rise in real wages in industry, improving from 1.5 percent in April to 4 percent in May. The data disclosed may support anticipated potential demand inflation risks, but so far significant demand pressures were not registered in inflation, stated Mr. Hagara. The biggest inflation risks still stem from the weaker Slovak crown, potentially looser fiscal policy and high energy and crude oil prices. "We expect the National Bank of Slovakia (NBS) to increase key interest rates by 0.5 percentage points in July," said the analyst.