Czech industry takes the lead while construction hiccups

Key arguments

• Industrial production remains solid and is taking the lead in the Czech economy, despite automotive plant holidays.
• Construction output contracted for the first time since November 2024, dragged lower by civil engineering.
• Wage growth is not inclined to accelerate; c.6% average wage growth is expected next year even with public sector and minimum wage increases.
• Expected inflation surge around the turn of the year will bite into real purchasing power and household spending.

Corresponding source evidence

1. Such a development could dampen imputed rents in core inflation, as these are partially affected by prices of building materials and wage costs in the sector.
2. Thus, we are likely to see a c.6% increase in average wages in the coming year, despite government plans for robust pay increases in the public sector and the envisaged surge in the minimum wage. · coming year
3. That said, the expected surge in inflation around the turn of the year, coupled with higher prices for essential goods and services, is set to bite into real purchasing power and is likely to take a toll on household spending budgets.