Sentiment in the Czech economy improved notably in May, with both business and consumer confidence on the rise. For the first time since July 2022, the composite confidence indicator has exceeded the long-term average. The services sector appears particularly optimistic.
The composite confidence indicator, measured as a basic index, rose by 4.3 points month-on-month to 101.0, with both sub-indices – business and consumer confidence – developing positively. The business confidence index increased by 4.5 points to 101.0, while consumer confidence rose by 3.0 points to 100.7 compared to April.
Services and Industry Boost Sentiment
The increase in business confidence was especially evident in the services sector, where the index rose by 6.6 points, and in industry, where it increased by 3.9 points. By contrast, confidence declined by 1.8 points in trade and by 1.7 points in construction.
“Confidence among companies improved noticeably in May – particularly in selected service sectors and in industry,” said Jiří Obst, Head of the Business Survey Department at the Czech Statistical Office (ČSÚ). In the services sector, higher demand expectations in the financial segment contributed significantly to the positive trend. In industry, the rise in confidence is primarily due to expectations of increased production in the coming months. “The confidence indicator is therefore above its long-term average for the first time since July 2022,” Obst added.
Consumer Confidence at a Six-Month High
Consumers were also more optimistic in May: the corresponding index rose by 3.0 points to 100.7. According to the ČSÚ, the proportion of consumers expecting the overall economic situation to worsen over the next twelve months declined. The number of households anticipating a deterioration in their own financial situation also fell. The share of respondents who consider their current financial situation to be worse than a year ago decreased slightly. However, the number of people who do not plan to make any major purchases in the next twelve months remained unchanged.
“Consumer confidence reached its highest level in six months in May and is now slightly above the long-term average,” explained Anastasija Neradová from the ČSÚ’s Economic Survey Department. The main reasons for the improvement are significantly reduced concerns about a worsening general economic situation and more moderate fears regarding personal finances.
