Confidence in the Czech economy fell for the third time month-on-month in September, falling by 2.4 points to 96.2 points compared to August. It has worsened for both businesses and consumers. The reason for companies’ pessimism is the continuing shortage of materials and their price increases, raising consumer concerns about rising prices. The Czech Statistical Office (CZSO) informed about it on the website today. In a year-on-year comparison, however, all indicators are higher.
“The weaker development of confidence indicators in September is not such a surprise and was foreshadowed by similar indicators from the euro area or Germany, which, as in the case of the domestic economy, suggest that supply chain problems and higher costs associated with rising commodity prices undermine economic recovery, especially in industry, “said Jakub Seidler, chief economist of the Czech Banking Association.
Among entrepreneurs, confidence in the economy fell by 1.8 points month-on-month to 95.3 points in September. According to the head of the CZSO Business Tendency Department, Jiří Obst, the development of business confidence continues to be negatively affected by the lack of key components in industry and the shortage and rapidly rising prices of building materials. “The situation in the automotive industry is so serious that it forces companies to significantly reduce or immediately suspend production activities. In addition, problems in the construction industry are exacerbated by a long-term shortage of employees,” added Obst.
Confidence among industrial enterprises fell by 4.6 points to 92.5. According to the CZSO, the stock of finished products increased slightly compared to the previous month, but the share of entrepreneurs who expect a higher rate of production in the next three months is the lowest since November 2020.
Confidence in construction companies fell by 4.8 points to 111.6 points compared to August. There have been more builders who assess their demand for construction work as insufficient.
However, companies from the trade and services sector were more optimistic about the economic situation in September compared to August. In trade, business confidence rose by 1.2 points to 103.6 points and in selected services, including the banking sector, by 1.1 points to 95.3 points.
Consumer confidence fell by 5.3 points month-on-month to 100.7. According to the CZSO, the number of respondents expecting a worsening of the overall economic situation for the next 12 months has increased, and at the same time the number of those who expect their own financial situation to improve has decreased. “Consumers are strongly concerned about rising prices, which they perceive as one of the important factors that may jeopardize their financial situation in the future,” said Anastasija Nejasova from the business survey department.
The survey among entrepreneurs took place from 1 to 17 September, and among consumers from 1 to 16 September.