According to data published today by the Czech Statistical Office (ČSÚ), industrial production and construction output fell again year-on-year in May, while foreign trade recorded positive results.
Industrial production and construction fall
Year-on-year industrial output fell by 3.2% and construction output by 6.8% (civil engineering and building construction). Industry recorded the most significant decline since last September, while building production reached its lowest level since February 2021. In the civil engineering construction sector, which includes the construction of roads or telecommunication and energy networks, output fell by 6.3% compared to last May. In the civil engineering sector, that is building construction, output decreased by 7.1%, according to ČSÚ. In a month-on-month comparison, construction output deteriorated by 5.1%.
On a month-on-month basis, industrial production decreased by 2.2%, with the decline in motor vehicle production being the main cause of the drop, while new orders increased by 0.8% year-on-year in May. Analysts believe that the chances of a quick recovery of the domestic industry are slim and that the growth forecast for this year may be revised towards zero. Vít Hradil, an analyst at Cyrrus, said that the difficult times for the industry continue, with the annual statistics slightly distorted by last year’s increase in the comparative base, offering only weak consolation.
UniCredit Bank analyst Patrik Rožumberský pointed out that conditions in the manufacturing sector indicate a persistent slowdown, according to the Purchasing Managers’ Index (PMI), also due to pending orders from abroad.
Foreign trade and future prospects
The May data on the construction industry shows that the sector is still contracting. Analysts told the Czech News Agency that high interest rates and labour shortages were to blame. The situation might start to improve slightly in the rest of the year, thanks to the fall in interest rates and the overall better performance of the Czech economy.
In the future, according to the chief economist at BH Securities, Štěpán Křeček, civil construction should be more prosperous due to upcoming public investments, while rising real estate market prices could support civil engineering.
The foreign trade surplus increased by CZK 4.4 billion to CZK 13.6 billion. Although foreign trade did well in May compared to industry and construction, the CZK 13.6 billion surplus fell short of market expectations, which had expected a positive balance of over CZK 28 billion. Analysts also pointed out that although exports increased year-on-year, they declined for the third consecutive month. Nevertheless, analysts positively assessed the development of foreign trade so far this year, forecasting a surplus of around CZK 200 billion for the whole year.
According to ČSÚ, the foreign trade result in May was mainly positively influenced by trade in electrical equipment. On the other hand, trade in computers, electronic and optical equipment had a negative impact.
Exports increased by 1.2% year-on-year to CZK 388.4 billion, while imports remained almost unchanged year-on-year at CZK 374.8 billion. Exports and imports decreased by 3.2% and 2.1% respectively on a monthly basis, providing a clearer representation of real economic trends, net of seasonal influences and other regular distortions.
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