Business confidence in the economy fell further, while consumer confidence rose

Confidence in the Czech economy fell for the third consecutive month in August, down 1.6 points to 94.1. Among business people, it fell in all sectors, while among consumers it increased after five months of decline. In July, consumer confidence reached its lowest level in the survey history, while in August, it rose by 3.5 points to 77.1.

Business confidence fell by 2.6 points month-on-month to 97.6 in August.

“The overall confidence in the economy among entrepreneurs decreased in all monitored sectors. While industry, trade, and services recorded a more moderate drop in confidence, which was a confirmation of the previous months’ developments, the construction sector experienced a more significant drop,” said Jiří Obst, head of the CSO’s economic surveys department.

According to him, one of the reasons for this is that, for the first time in more than a year and a quarter, the share of entrepreneurs expecting a decline in the number of employees for the next three months prevailed, albeit slightly. The question is whether this is just a one-off fluctuation or a change in the trend of sentiment in the construction industry, he added.

Business confidence in the construction sector fell 8.4 points month-on-month to 110.2. It was down two points from July at 96.9 in industry, 2.4 points to 95.2 in trade, and 2.7 points to 97.3 in services.

By contrast, confidence among consumers rose month-on-month. According to the statisticians, compared to July, respondents are less worried about the deterioration of the overall economic situation and their financial situation. The number of respondents rating their current financial crisis worse than twelve months earlier also decreased month-on-month.

Conversely, the number of respondents who believe that the next twelve months will not be an excellent time to make large purchases has increased slightly.

“August’s month-on-month rise in consumer confidence can be seen as a correction to the previous five-month decline. Although most of the monitored indicators recorded a slight improvement, all of them still look worse compared to long-term averages,” noted Anastasija Nejasova from the CSO’s economic surveys department.

According to her, this also applies to expectations of further inflation development. However, the month-on-month decrease in the number of respondents worried about a further rise in the price level can be positively assessed.