Consumers and businesses are losing faith in the Czech economy

A survey of businesses and consumers conducted between 1 and 18 October shows that confidence in the Czech economy fell by 0.9 points to 95.3 points in October, the fourth consecutive month of decline. Businesses and consumers seem to be more pessimistic. 

Businesses’ confidence in the economy is affected by the unfavorable situation in the automotive industry and the shortage of materials, while consumers are particularly worried about rising prices. This was revealed by information published on the website of the Czech Statistical Office(ČSÚ). Businesses’ confidence in the economy fell by 0.6 points month-on-month to 94.7 in October, while consumers’ confidence fell by 2.2 points to 98.5.

In addition to the situation in the automotive industry and related sectors, the shortage of materials is negatively affecting the companies’ view of the Czech economy, according to Jiří Obst, head of the ČSÚ’s economic surveys department.

Companies perceive it as a significant barrier, which often leads to a decline or stoppage of production. This is reflected, among other things, in significantly lower use of production capacities, Obst added. Most of all, consumers believe that the current significant increase in the price level will continue, with half of them expecting it to rise further in the coming months, said Anastasija Nejasova from the department of cyclical surveys.

Among firms operating in the construction sector, confidence in the Czech economy remained stagnant at 111.6 points in September. The part of builders who rate the demand for work as insufficient has barely changed, and construction companies also do not expect a significant change in the number of employees in the next three months. At the same time, a shortage of workers is the main barrier to production growth for 38 percent of firms, while around 17 percent of firms face a lack of materials or equipment.

Firms in the trade and services sector were more optimistic about the economy in October compared to September. Business confidence rose 2.3 points to 105.9, and trust in selected service industries, including the banking sector, increased 2.3 points to 97.6.