Construction and industrial production in the Czech Republic rose year-on-year in August. In construction, the pace of growth slowed to 0.4 percent from July’s 2 percent, while in industry output rose 1.5 percent after five months of decline, according to data released today that Czech Statistical Office (CZSO).
According to industry analysts, the shift in the date of racing holidays at car companies has helped, but its overall performance is stagnating, while expensive financing or economic uncertainty are preventing a greater revival of the construction industry. However, higher car exports contributed to a better foreign trade balance, which showed a surplus of 14.3 billion crowns in August. Year-on-year, it was a 20.8 billion better result.
“The development of industrial production in August, just like in July, was most influenced by the production of motor vehicles and the shift in plant-wide holidays in the largest enterprises of this sector,” said Radek Matějka, director of the Department of Agriculture and Forestry, Industry, Construction and Energy Statistics of the CZSO. According to Banka Creditas analyst Petr Dufek, the results of the industry would have been worse without taking into account car companies. Production in August fell month-on-month in most branches of the manufacturing industry, year-on-year by half. According to experts, industrial production stagnated year-on-year in the cumulative period of July and August.
According to the CZSO, automobile production and the shift in its holidays also had a positive impact on new orders in August, the value of which increased by more than a tenth year-on-year. UniCredit Bank analyst Patrik Rožumberský pointed out that according to advance PMI indicators in the Czech Republic and the eurozone, manufacturing conditions point to a continuing slowdown, while the faster start-up of domestic production is hindered by the unflattering results of German industry.
According to Petr Smutný from PwC, in some regions the results of industry can also be negatively affected by the floods, which hit many companies as hard as households in September. On the contrary, they may have growth potential in the Czech construction industry. The only question is what decision the new minister will make with digital building management to increase the throughput of building permits, Smutný added.
In August, building construction, i.e. the construction of houses and offices, recorded a year-on-year decrease of 2.3 percent, on the other hand, engineering construction, which includes the construction of roads or telecommunications and energy networks, increased by 5.3 percent. According to analysts, it is precisely the insufficient construction of buildings that is significantly reducing construction production in the Czech Republic.
“The generally increased economic uncertainty is behind the weak demand, the still relatively high interest rates also play a role,” said Komerční banka economist Jan Vejmělek. According to economist Lukáš Kovanda from Trinity Bank, the problems with the digitization of the construction industry have not yet had a negative impact on the holiday results. This may be because a number of builders applied for permits before the new systems were launched.
According to the CZSO, the Czech Republic’s foreign trade surplus in August was due to higher year-on-year growth in exports, especially for cars, where it rose by more than a quarter. Analysts believe that further developments are uncertain. According to Raiffeisenbank analyst Martin Krona, the additional tariffs on Chinese electric cars, the introduction of which the European Commission announced last week, may also have a negative impact on the automotive industry, due to which a retaliatory step from China can be expected.
Overall, exports from the Czech Republic rose year-on-year by 11.5 percent to CZK 371.1 billion in August, and imports by 5.2 percent to CZK 356.8 billion.
Source: www.tyden.cz
