Czech industrial production increased in real terms by 1.5% year on year and by 1.8% month on month in August. The value of new orders increased by 10.6% y/y and 9.4% m/m. The average registered number of employees fell by 1.9% y/y.

The industry registered its first y/y growth after five months and it is also up on the 1.9% y/y drop in July when the skid softened on the -3.3% in June and was also affected by the shift in holidays in large automobile companies.

“Like in July, the development of industrial production in August was influenced the most by the manufacture of motor vehicles and a shift in the largest enterprises thereof,” commented Radek Matjeka of the Czech Statistical Office (CZSO).

“In cumulation for July and August, the industrial production stagnated y/y,” Matejka added, while CZSO’s Veronika Dolezalova credited “the contribution of manufacture of motor vehicles and the influence of the shifted holidays” for the increase in the value of new industrial orders by a tenth y/y.

Czech industry suffered from the poor performance of the German economy, its key export market and analysts surveyed by the Czech Television (CT) did not project too much optimism in their assessments, pointing to drops in most of the manufacturing sectors.

“A condition continues,” which the director of economic policies at the Czech Union of Industry Bohuslav Cizek described for CT as “delaying of hope for a more significant revival.”

CZSO also reported on the output of the construction sector, where the 0.4% y/y growth neared stagnation and m/m it fell by 1.6% in August. The number of started dwellings fell by 11.3% y/y, the number of completed dwellings slid by 19.9% and the approximated value of permitted constructions was CZK49.5bn (€1.95bn), which is down by 1.2%, CZSO highlighted.  

“Construction output was stagnating y/y” in August, stated Petra Curinova of CZSO, adding that “more successful was the civil engineering construction, the production of which increased by 5.3%” and “the production of building construction decreased by 2.3% y/y.”

The operations director of the fintech investment company Fingood, Ondrej Kozel, pointed out that banks in the country have not reflected on the lowering of interest rates, which the Czech National Bank (CNB) has pursued this year and the bank loans and mortgages “remain expensive.”

“Developers are besides higher rates facing higher demands of banks for guarantees, which prevent financing of new projects,” Kozel was quoted as saying by CT.