Continued December downturn in sentiment, but not in households' purchase plans
Comment by Jaromír Šindel, Chief Economist of the CBA: The deterioration in economic sentiment in December does not yet represent a turning point for the outlook for the Czech economic recovery, which anticipates a deterioration in dynamics at the end of the year 2025. Household consumption plans remain resilient, while industry and the labour market are sending rather cautious signals, which poses a risk to the expected recovery in investment activity and the early stabilisation of rising registered unemployment. The outlook for lower administered energy prices supports falling price expectations, but persistent pressures in construction and services continue to dampen disinflationary optimism, sending a neutral rather than dovish message to the central bank.
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And I wish you a wonderful Christmas season and a happy and prosperous 2026.
Jaromír Šindel
Economic sentiment deteriorated in December to the level of late summer
But the economy was growing at a brisk pace and so the deterioration in sentiment does not yet bring a turning point for our outlook for continued recovery in the Czech economy
However, the deteriorating sentiment has not hit households' large purchase plans, which remain resistant to weakness in the industry
Industrial sentiment has been hit by a fall in expected production and exports, which fits in with the general weakness of recent quarters, where foreign sentiment indicators have also remained trapped
Employment expectations have also returned to worse levels that do not signal an early break in the gradual rise in registered unemployment, which is a negative signal against the CBA forecast
Price expectations fell further in December, in line with the generally expected impact of lower administered energy prices (see fall in price expectations in industry, downward trend in households) ...
However, price expectations did not fall in the construction sector (here in connection with imputed rents) ...
... and the favourable correction in services brings only partial relief to the central bank's previous hawkish message about the risk of higher core price growth in services