Czech Economic Sentiment Improves Slightly in February as Business Outlook Strengthens

Economic confidence in the Czech Republic showed a modest improvement in February, driven largely by a more optimistic outlook among businesses, while households became slightly more cautious.

The latest survey data indicate that overall sentiment in the economy edged higher compared with January. Companies across several key sectors reported improved expectations for the coming months, helping to lift the broader indicator of economic confidence. Compared with the same period last year, both corporate and household sentiment remain on firmer ground.

Manufacturing posted one of the strongest monthly improvements. Firms reported better expectations for production in the near term after several months of weaker outlooks. Although inventories of finished goods increased, fewer industrial companies described current demand as insufficient. At the same time, more manufacturers anticipate raising prices in the months ahead.

Construction also continued to show resilience. Companies in the sector reported stable demand conditions and an increased willingness to expand staffing levels in the short term. Expectations regarding price developments remained relatively steady. Compared with a year ago, construction companies appear more confident about business conditions.

Retail trade presented a more mixed picture. While companies expressed improved expectations for the coming quarter, assessments of recent performance softened. Stock levels declined slightly, and pricing expectations remained largely unchanged. On an annual basis, sentiment among retailers remains below last year’s level.

In service industries, including financial services, business sentiment weakened compared with January. Firms reported softer demand conditions and more cautious expectations for the months ahead. However, confidence in services remains somewhat higher than a year earlier.

Households, meanwhile, displayed a slight dip in confidence. Although fewer consumers expect a worsening of the broader economic situation over the next year, optimism about their own financial prospects declined modestly. Concerns about rising prices increased, while fears related to unemployment eased somewhat. Spending intentions for major purchases remained broadly stable.

Overall, February’s data suggest that business sentiment is stabilising and gradually improving across much of the economy, even as consumers continue to weigh price pressures and financial uncertainty. The divergence between corporate and household confidence highlights a cautious but gradually firming economic environment as the year progresses.

Source: CSO