Trust indicators
2.6
% yoy
Total annual change
-1.7
%
Month-on-month change in total
Trust indicators
indices, long-term average = 100
Comments
January stability in economic sentiment hides four clearer signals for growth and inflation
Comment by Jaromír Šindel, Chief Economist of the CBA: January show stable economic sentiment, but industry continues to be plagued by weak demand with negative consequences for investment. On the other hand, consumer purchasing plans remain full of optimism, also thanks to both lower price expectations, which are dampened by industry but not services, and better expectations on the labour market, where the service sector, which is lacking more workers, is making a positive contribution. Thus, it looks like continued solid economic growth this year with noticeably lower headline inflation. This combination is likely to shift the discussion at the CNB from rate stability or growth to rate stability or a possible decline, which is, however, not certain given the ongoing "services inflation" and the change in fiscal policy settings.
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.
November sentiment slightly worse on average, but with significant movements in detail
Comment by Jaromír Šindel, Chief Economist of the CBA: November's confidence in the Czech economy weakened slightly, but still suggests continued growth. However, there are significant differences across sectors, reflecting the looming change in economic policy after the elections. Households remain visibly more optimistic, thanks to rapidly rising wages and perhaps in response to the new government's plans, while industry is returning to earlier weakness. Services are again reporting rising price expectations, keeping the central bank in hawkish mode.
October industrial sentiment awakening with hawkish price signals
Comment by Jaromír Šindel, Chief Economist of the CBA: Stronger sentiment in October suggests a return to stronger GDP growth for the end of this year after a probably slightly worse result in Q3. Higher price expectations may delay the return of core inflation to the target.
August sentiment signals stronger growth, less inflationary pressures in services prices, but also worse news for the labour market
Economic commentary by Jaromir Šindel, Chief Economist of the CBA
July sentiment brings slightly worse signal for the economy and the CNB
Economic commentary by Jaromir Šindel, Chief Economist of the CBA