Confidence in the Czech economy was the highest in the last year in April. It rose to 94.7 points from 87 points in March, the indicator of the Czech Statistical Office showed. Both business and consumer confidence have increased. According to statistics, this appears to be an announced dismantling of anti-coronavirus measures.
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“The expected growth in the pace of manufacturing activity in industry and especially the expected improvement in demand and the economic situation of companies in trade and services, probably motivated by the announced gradual disintegration of the economy, were by far the most important factors in the growth of April business confidence,” said Jiří Obst, CZSO’s Head of Business Cycle Surveys.
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The business confidence indicator increased by 7.1 points to 94.8 points compared to March, pessimism among entrepreneurs increased only in construction. Consumer confidence rose by 9.9 points to 93.9 points. Confidence is higher compared to last April, when the effects of the first wave of the coronavirus pandemic were fully felt.
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In industry, confidence rose by 6.9 points to 102.3 points in April, with the last time above the 100 in November 2018 and higher than it was now three years ago. In particular, the share of entrepreneurs expecting growth in the pace of production in the next three months increased and the share of those who assessed demand as insufficient decreased. 30 percent of companies identified insufficient demand as the main barriers to production growth, while 24 percent of companies limit the lack of materials and equipment. “The lack of material and equipment was identified as the main barrier to production growth by the largest percentage of respondents since the beginning of the survey,” emphasized Silvie Vyplašilová from the CZSO.
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The utilization of production capacities of enterprises in the manufacturing industry reached almost 85 percent in April, which is slightly less than in the previous quarter. Entrepreneurs estimate that work will be provided by contracts for 12 months. Companies in the manufacturing industry expect investment growth of about 11 percent this year after last year’s decline of 15 percent. “The expected investments this year should mainly concern the renewal of existing production facilities and the expansion of production capacities. Less acquisition of new technologies, “said Vyplašilová.
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Confidence among entrepreneurs in April fell only in construction, compared to March by 5.5 points to 110.9 points. Compared to last April, confidence in construction is higher. In April this year, the share of builders who consider demand to be insufficient increased, while the share of entrepreneurs expecting to increase the number of employees in the next three months decreased.
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Business confidence in services, including the banking sector, rose by 8.6 points to 85.4 points, and even in this case the confidence is higher year-on-year. It was a bit higher last September.
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Among consumers, confidence in the economy increased after a three-month decline, rising by 9.9 points to 93.9 compared to March. It is higher year-on-year, it returned to the level from last summer. After three months, the share of consumers expecting an economic downturn in the next 12 months decreased. Concerns about rising unemployment have fallen, but the proportion of consumers expecting it to rise remains well above average. Consumers’ fears of a deterioration in their own financial situation have hardly changed since March, but the number of respondents who expect to save some money in 12 months has increased. People’s fears of rising prices are still high, the CZSO said.
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