Overall confidence in the Czech Republic economy decreased in April

• Overall confidence in the economy remarkably decreased in April, show the latest survey published by the Czech Statistical Office.
• The composite confidence indicator decreased by 19.6% to 74.8%, m-o-m.
• Business confidence fell by 19.3% to 73.8% compared to March.
• Consumer confidence indicator decreased by 20.4% to 80.1%, m-o-m.
• The composite confidence indicator (economic sentiment indicator) that is stated by basic indices and the individual composite indicators have the sharpest decrease from the beginning of the survey.

In industry, in April, confidence indicator decreased by 16.6 points to 72.0, the sharpest decrease from the beginning of the survey. Expectations of the employment decreased, too. Stocks of finished goods increased compared to March. Expectations of total economic situation development for the next three as well as six months are worse. The most significant barrier of production is insufficient demand; it was stated by 45% of respondents approximately. Approximately 22% of respondents choose barrier: other. According to the businessmen in the industry sector, the situation around coronavirus and government measure impact their business activities. Overall, confidence in the industry is significantly lower, y-o-y.

Manufacturing industry

The production capacity utilization in manufacturing industry decreased to 69.4%, q-o-q. It is the lowest value in the regular quarterly survey in the manufacturing industry from the beginning of the survey.

Respondents estimate they have work secured by contracts for 10.4 months, which is less than in the previous quarter.

Investment

From the investment survey (the survey was realized from March. Some companies did not reflect the situation around the coronavirus), companies expect a decrease in the investment activity in 2020.

This decrease is around 15 %, y-o-y. They invest in the renewal of the current production equipment and extension of the capacity utilization. The investment to the new technologies is the lower.

Construction sector

Confidence in construction decreased by 11.7 points to 107.3, m-o-m. The assessment of total demand for construction work decreased compared to March. Expectation about employment decreased significantly. Expectations of total economic situation development are worse.

The most significant barrier of production is still lack of staff; it was stated by 37 % of respondents approximately. The second significant barrier of production is insufficient demand; it was reported by 22 % of respondents almost. Finally, confidence in construction is lower, m-o-m.

Trade

In trade, in April, confidence indicator decreased by 14.4 points to 85.4 (the sharpest decrease from the beginning of the survey). The assessment of the overall economic situation of the respondents decreased, m-o-m. The stocks increased slowly. Expectations of total economic situation development for the next three decreased significantly. Finally, confidence in trade is lower, y-o-y.

Services

In selected services (incl. banking sector), confidence decreased by 23.7 points to 70.5 (the sharpest decrease from the beginning of the survey). The assessment of the current economic situation of the respondents decreased compared to March. Assessment of demand decreased. 

Expectations of total demand for the next three months fell. Expectations of overall economic situation development for the next three as well as six months decreased significantly.

A third of the respondents choose the ”other” barrier, which includes the government measures connecting the coronavirus. Overall, confidence in selected services is significantly lower, y-o-y (the sharpest y-o-y decrease from the beginning of the survey).