Sunday, 26 October 2025
Confidence in the Czech economy improved again in October, reflecting a cautious return of optimism among both businesses and households. According to the Czech Statistical Office, sentiment rose for the second consecutive month to reach its highest level in nearly four years. The findings suggest that the economic slowdown that followed the post-pandemic energy shock may be giving way to a period of gradual recovery.
Manufacturers reported stronger order books and a better outlook for production in the months ahead, particularly in engineering and automotive supply chains. While cost pressures and weak foreign demand remain concerns, companies indicated that overall market conditions are stabilising. Factory capacity use inched higher, and managers expressed greater confidence in short-term output. Although many firms still cite insufficient demand as their main obstacle, the share of businesses reporting no major barriers has increased compared with the summer, signalling a more favourable operating climate.
The recovery has yet to spread evenly across all sectors. Builders have turned slightly more cautious following a strong summer season, citing staff shortages and rising wage costs as key constraints. Hiring expectations have softened, and some companies expect slower activity in the winter months. Retailers, meanwhile, also reported weaker confidence in October as household spending remains selective and inventories continue to build. While traders remain hopeful for next year, many say customers are focusing on essential purchases rather than larger discretionary items.
In services, sentiment edged upward, supported by stable demand in finance, hospitality and real estate. Business owners described conditions as steady, with some improvement in bookings and expectations for future orders. Roughly half of respondents said they were operating without major constraints, while others pointed to regulation, competition and energy costs as limiting factors.
The sharpest rise came from consumers, whose confidence climbed to its strongest level since early 2020, before the pandemic. Fewer households now expect the national economy to deteriorate, and more foresee improvements in their personal finances. Although some still report tighter budgets than a year ago, fears of unemployment and inflation have eased noticeably. Economists link this renewed optimism to wage growth, moderating prices and greater stability in energy costs, which have supported purchasing power in recent months.
Overall, the October data portray an economy gradually regaining balance after two challenging years. Industry is rebuilding momentum, households are less anxious about the future, and inflation pressures are receding. Yet the pace of recovery remains uneven, with construction and retail still underperforming other sectors. Analysts expect growth to strengthen only slowly through early 2026 as higher borrowing costs and global uncertainty continue to temper investment and demand.
Source: Czech Statistical Office
