Czech confidence stagnates to three-year low

Some increase in household confidence in July was due to their lower concern about the worsening economic situation. This is probably due to the fact that, despite worse news from abroad in recent quarters, the domestic economy continues to perform well and consumers are less worried about the future. Consumer confidence thus increased in July and is at the highest since February this year. However, average consumer confidence this year is close to the 2016-average.

This is a weaker figure in the context of the last few years, but it is still a relatively positive development in the long-run perspective.

Confidence among entrepreneurs declined further in July, reaching the lowest level since August 2014. The decline in July was mainly due to to a decline in confidence in construction and services. Some decline in the construction sector is not so bad, as confidence is close to its historically highest level this year, but confidence has declined in services for the fifth consecutive month and dropped to its weakest level in the past three years. Confidence in the industry remained unchanged in July, but it remains at the lowest level in almost six years.

This year, the confidence indicator started to deteriorate relatively quickly and the average level is slightly below the 2016-average figure. Confidence has declined most in industry and has reached its lowest level since September 2013, most likely driven by slowdown in the automotive industry, trade wars and uncertainty associated with Brexit. Confidence in trade has also started to decline and is currently below the 2014 average. Confidence in services remains high but has also started to decline in recent months and is the lowest in the last three years. Despite the July decline, high confidence is thus maintained only in construction.