Saturday, 15 March 2025
The Czech economy displayed mixed signals in February, with business confidence improving slightly while consumer sentiment weakened, according to the latest data from the Czech Statistical Office (CZSO). The composite confidence indicator, which measures economic sentiment across industries and consumers, edged up by 0.4 points to 97.8 compared to January. This increase was primarily driven by a rise in business confidence, which climbed 0.5 points to 98.0, whereas consumer confidence declined by 0.5 points to 96.6. Despite the month-on-month fluctuation, all indicators remain at higher levels than in February 2024.
The industrial sector recorded a slight improvement in sentiment, with the confidence index rising by 0.3 points to 93.5. A smaller proportion of businesses reported negative demand assessments, while finished goods inventories increased slightly. Expectations for production activity growth over the next three months saw a minor uptick, while anticipated price increases in the sector remained largely unchanged following a notable decline in January. Compared to the same period last year, confidence in the industry sector remains stronger.
In the construction sector, confidence saw a significant increase, rising by 3.0 points to 114.7. Fewer entrepreneurs reported concerns about current demand for construction work, and expectations for employment growth over the next three months improved slightly. Forecasts for construction price hikes, however, remained unchanged for the second consecutive month. On a year-on-year basis, confidence in construction has strengthened considerably.
Similarly, business confidence in the trade sector rose sharply, increasing by 3.7 points to 99.9 from the previous month. Companies expressed a more optimistic outlook regarding their overall economic situation, and a greater number of respondents anticipated improvements in their economic conditions over the next three months. Inventory levels remained stable, while expectations for price increases declined slightly. Business sentiment in the trade sector is also higher compared to February 2024.
Meanwhile, confidence in selected service sectors, including finance, remained steady at 100.5, unchanged from January. While fewer businesses expressed positive views on current demand, there was an increase in the number of firms expecting demand to rise in the coming months. However, expectations for price increases declined slightly but remained above the long-term average. Overall, year-on-year confidence levels in the services sector are up.
Conversely, consumer confidence in the Czech economy dipped slightly in February, with the confidence index falling by 0.5 points to 96.6. A growing share of consumers expects the overall economic situation in the country to deteriorate over the next twelve months, continuing a trend observed over the past three years. The outlook for personal financial situations remained unchanged from January, though expectations for improvement in household finances weakened slightly. The number of respondents who do not plan to make major purchases in the coming year remained steady, while concerns over rising unemployment increased. Expectations of further price hikes, which had risen slightly in January, remained stable. Despite the monthly decline, consumer confidence is higher compared to the same period last year.
These findings indicate that while businesses, particularly in construction and trade, are seeing stronger sentiment, consumers remain wary of economic uncertainties, including potential inflation and job market instability. The evolving confidence trends will be closely monitored as they shape expectations for economic growth and stability in the coming months.
Source: Czech Statistical Office
