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News

Industry is gaining momentum

9.10.2017
Company: Komerční banka, a.s.

Industrial production gained speed in August despite company-wide holidays and should perform even better in the autumn months. Construction output surpassed our expectations, as well, but it still remains hampered by civil engineering, where EU-funded projects are still missing. In the coming months, however, we expect construction output to accelerate, as well. 

August industrial output exceeded our expectations when it reached 5.8% yoy. Compared with the previous month, it even rose 14.3%. The August result is all the better considering it was still partially hampered by company-wide holidays at some automotive companies (such as the Hyundai carmaker in Nošovice). However, the production of motor vehicles, trailers and semi-trailers contributed 1.1pp to the yoy growth of industry and rose 5.2% yoy. Production and distribution of electricity, gas, heat and air-conditioning increased the most (14.1% yoy).

The tightened situation on the labour market and the difficulty of finding a suitable work force push wages up in industry. In August, wages were 7.5% higher yoy.

In autumn months, we expect Czech industry will gather even more speed. This is indicated not only by the end of company-wide holidays but also leading indicators. In September, Czech PMI climbed to its five-month maximum, and the value of new orders is also promising. In August, they were 4.9% higher in a yoy comparison (domestic orders up 8.5% yoy). As a result, we expect Czech industry to reach a solid 8.5% this year.

Construction output performed better than we had expected in August, as well. It added 1.9% yoy, while our estimate counted with just 0.3% yoy. Construction production is, however, still dragged by civil engineering. Its output fell 1.7% yoy in August, indicating that the tapping of EU funds is still sluggish.

On the contrary, building construction performs well. It is supported by demand for residential housing and the growing willingness of the private sector to invest more. The number of dwellings started in August was 29.1% higher yoy, and the number of completed dwellings jumped 29.6% yoy.

We expect the growth of construction output to reach 5.2% for the whole of this year. Next year, thanks to the start of publicly financed infrastructure projects, it should accelerate to 6.6%.

Tags: Finance |

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