News

Construction Reviving, Mood Improving

Industrialists are still optimistic despite challenges and increasing problems with ensuring sufficient personnel capacities. Consumer confidence is significantly better than in July. Mood in the construction sector has been the best since January 2016. Czech Statistical Office has released new information about August business cycle survey today. 

Czech industrial production displays good condition, which is reflected in overall good mood of Czech industrialists. Confidence in the key sector of Czech economy has been improving for three months in a row. Industrialists have a cogent reason to trust the Czech economy. The first argument is Eurozone activity powering Czech exporters. Foreign demand outlook remains favorable. Another reason for their optimism is the recent CZK/EUR exchange rate development. Since the end of the exchange rate commitment, Czech koruna has behaved in an orderly manner and gradually appreciating. Industrialists await stable development of their production activity and employment for the next three months.

Mood in the construction sector has been the best since January 2016. Optimism in construction is fueled especially by the situation in building construction, where the construction of industrial and office buildings and flats is doing very well. Order books are filling up and it will soon be reflected in the need for higher employment and continuing production activity.
Consumers’ mood is on the upswing again, well above the last month’s level. Even though consumers are more satisfied both in monthly and yearly comparison, their attitude to price development hasn’t improved. Consumers are more worried about further price increase.

Consumer worries about the price increase could be a signal for the Czech National Bank that the monetary policy has been eased too much. CNB decided to increase its key interest rate after almost 10 years at its August monetary policy meeting. It is likely, that rapid price increase at the real estate market will decelerate due to higher interest rate, which will make financing of real estate more expensive.

Author: Petr Gapko, Chief Economist MONETA Money Bank