Restrictions on production in domestic carmakers led Czech industry to a deeper decline in September and foreign trade to a deficit of more than 13 billion. Economists do not expect improved. The trade balance was also affected by rising prices of natural gas and oil. Although construction accelerated growth in September, according to analysts, this is due to a comparison with last year’s low numbers, and construction is still hampered by high material prices and a shortage of workers. Data on industry, foreign trade and construction were published today by the Czech Statistical Office (CSO).
The year-on-year decline in industrial production accelerated to four percent in September from 1.4 percent in August, and the Czech Republic’s foreign trade deficit of CZK 13.3 billion was CZK 47.2 billion worse year-on-year. Construction output rose 2.2 percent year on year in September after a 1.2 percent increase in August.
The industry fell in September due to a drop in car production by a third as a result of extraordinary production outages caused by a lack of necessary parts, analysts contacted ČTK agreed. Most other industries report an increase in production. Problems with lack of inputs and forced outages will culminate in the October numbers in the automotive industry, economists think. “Especially in the automotive industry, the worst is yet to come,” said PwC CR partner Petr Smutný.
The value of new orders fell by 1.2 percent in September compared to last year. Nevertheless, according to a survey by the Confederation of Industry, almost 60 percent of industrial companies remain cautiously optimistic and expect higher or at least as high profits for the whole of this year as last year.
The foreign trade balance for September ended worse than analysts had expected. A significant number of almost finished cars could not be exported because it lacked chips, Raiffeisenbank analyst David Vagenknecht pointed out. “The balance with motor vehicles showed the worst result since 2012 and the year-on-year decline in car exports was the deepest since May last year, which was affected by the coronavirus lockdown,” he said.
The outlook for the future is not favorable, said Deloitte economist Václav Franče. According to him, the problem with the lack of semiconductor chips will disappear in the second half of next year at the earliest. According to him, energy prices, especially natural gas prices, will also remain tense.
Building construction, which is the construction of residential and non-residential buildings, increased by 4.9 percent compared to last September. The production of civil engineering, ie the construction of roads or telecommunications and energy networks, fell by 3.6 percent year on year. The chief economist of UniCredit Group, Pavel Sobíšek, pointed out that the performance of the construction industry is comparing with last year’s low base, but significantly remains below the level of the same period in 2019.
According to analysts, in addition to high prices for building materials and a shortage of workers, inflation is also preventing the completion of some projects. “Currently, there are enough projects with building permits issued. However, the bottleneck is on the side of builders who do not manage to implement the permitted constructions for the planned budgets,” said Štěpán Křeček, chief economist at BH Securities.