Manufacturing and construction activity in the Czech Republic supporting industrial growth and exports.
Czech Republic, September 8, 2025
Industrial production in the Czech Republic strengthened, driven by broad gains in motor vehicles, machinery, chemicals, pharmaceuticals and fabricated metals. New orders rose notably, with domestic demand especially strong, while construction output and the value of building permits jumped, signaling further activity ahead. Exports outpaced imports, narrowing the goods deficit, supported by vehicles and machinery. Employment in industry eased slightly while construction jobs ticked up; wage growth showed modest moderation. The defense sector is expanding and absorbing capacity from automotive shifts. Overall, the data point to a favorable near-term outlook for exporters and continued economic momentum.
July data show the Czech economy gaining momentum: industrial output rose, new orders climbed and construction activity remained robust. Working-day adjusted industrial production increased by 1.8% year-on-year and by 0.8% month-on-month in July. On an unadjusted basis, output was up 4.9% year-on-year, beating expectations and signaling a broader pickup across factories.
Gains were broad-based across sectors that form the backbone of local manufacturing and supply chains. Strong contributions came from motor vehicle production, machinery, chemicals and plastics, pharmaceuticals and fabricated metal products. A marked rise in the value of new orders — 6.6% year-on-year in current prices and 2.9% month-on-month — points to rising demand for factory output ahead.
Domestic new orders jumped by 13.0% year-on-year, while orders from abroad rose by 2.9% year-on-year. The motor vehicle sector was the dominant driver of the headline increase in order books; part of the large annual rise reflects a low comparative base from the prior year, contributing to an approximately 15% annual increase in automotive orders. Several manufacturers of transport equipment also secured significant long-term contracts, helping to lift future production prospects.
Despite rising output and orders, the average number of employees in industry fell by 1.9% year-on-year in July. Monthly nominal wage growth in industry eased to 5.0% year-on-year, a softening seen as part of monthly volatility rather than a break in a longer-term trend toward robust wages. In construction, employment edged up by 0.6% year-on-year while average wage growth slowed to 3.8% year-on-year.
The construction sector delivered a strong performance, with output up 10.1% year-on-year and 1.0% month-on-month in July. The sector’s expansion is being described as still in its growth phase, reflecting healthy investment and activity across public and private building. The indicative value of building permits climbed by a striking 37.9% year-on-year, suggesting more projects entering the pipeline.
However, residential activity shows mixed signals: the number of dwellings started was 9.2% lower than a year ago, and completions were 13.4% lower. These contrasts suggest timing and backlog effects: many projects have permits and contracts in place, but starts and completions can lag as construction schedules and materials or labour constraints play out. Housing demand appears not yet saturated despite ongoing gains in home prices.
New mortgage lending reached a record level in the second quarter of the year when excluding the pandemic-era spike. This surge may reflect households trying to lock in favorable rates ahead of a possible pause in policy moves, and it also underlines sustained appetite for housing among buyers.
Preliminary foreign trade figures show a goods deficit of CZK 1.7 billion in July, a narrower shortfall than a year earlier by CZK 5.5 billion. Exports grew by 4.7% year-on-year while imports rose by 3.1% year-on-year. A higher surplus in trade of motor vehicles, other transport equipment and machinery helped improve the balance. Solid new orders point to a favorable short-term outlook for exporters.
Analysts view the July results as evidence that industry may be bottoming out and aligning with strong household consumption and construction to support growth. The construction sector’s sizable permit pipeline and steady output gains suggest that building activity will continue to be a key growth engine in the near term. Overall, the economy looks to be moving forward on a reasonably solid footing.
The country’s industrial base has deep roots in diversified manufacturing and a skilled workforce, factors that help in adapting to shifts across sectors. Recent turbulence in the automotive segment — including a drop in vehicle production earlier in the year — has coincided with increased activity in defense-related manufacturing, which has been expanding output and hiring since 2022. This adjustment in industrial composition is reshaping where jobs and investment flow, with retraining needs generally described as modest where workers transition between related factory roles.
A: Working-day adjusted industrial production rose by 1.8% year-on-year and 0.8% month-on-month; unadjusted output climbed 4.9% year-on-year.
A: Motor vehicles, machinery, chemicals and plastics, pharmaceuticals and fabricated metals were the main contributors.
A: Construction output grew 10.1% year-on-year and 1.0% month-on-month in July. Building permits rose 37.9% year-on-year, though dwelling starts and completions were down compared with a year ago.
A: The value of new orders rose 6.6% year-on-year with domestic demand especially strong (+13.0%), suggesting a favorable outlook for production in coming months.
A: Industry employment slipped 1.9% year-on-year while industrial wage growth eased to 5.0%. Construction employment increased slightly and wages there grew by 3.8% year-on-year.
| Feature | July change | Notes |
|---|---|---|
| Industrial production (working-day adjusted) | +1.8% y/y | Also +0.8% month-on-month; unadjusted +4.9% y/y |
| New orders (value) | +6.6% y/y; +2.9% m/m | Domestic +13.0%; foreign +2.9% |
| Construction output | +10.1% y/y; +1.0% m/m | Permits +37.9% y/y; starts -9.2%; completions -13.4% |
| Employment | Industry -1.9% y/y; Construction +0.6% y/y | Wages: Industry 5.0% y/y; Construction 3.8% y/y |
| Trade | Exports +4.7% y/y; Imports +3.1% y/y | Goods deficit CZK 1.7bn in July, narrower than a year earlier |
Note: Figures are for July and reflect year-on-year and month-on-month changes. Data capture manufacturing, construction and trade developments and are intended to summarize recent trends for industry and building activity.
, September 8, 2025 News Summary Princeton’s council will consider borrowing $6.3 million from the New…
Richmond Hill, Georgia, September 8, 2025 News Summary ECI Group has broken ground on The Averly…
Pasadena, California, September 8, 2025 News Summary The Pasadena City Council will consider an amended development…
Latin America, September 8, 2025 News Summary Two recent studies present conflicting size and growth estimates…
China, September 8, 2025 News Summary Dongfeng has finished construction of a 47,000 m² gigacasting factory…
Dublin, Ireland, September 8, 2025 News Summary A major market study forecasts significant expansion in the…