Czech Republic, September 8, 2025
News Summary
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.
Construction keeps pace as Czech industry edges up in July
Quick take
Czech construction activity remained strong in July while industry showed signs of recovery. Industrial output rose modestly on a workday-adjusted basis, new orders climbed, and construction output posted double-digit annual growth. Trade in goods stayed close to balanced as exports outpaced imports, and mortgage lending reached fresh highs earlier in the year. Overall signals point to a broadly solid economic footing going into the autumn.
What happened first — the main facts
July brought a pick-up in industrial activity: workday-adjusted production rose by 1.8% year-on-year and by 0.8% month-on-month. On an unadjusted basis, output was stronger at 4.9% year-on-year. The gains were widest in key manufacturing sectors — motor vehicles, machinery, chemicals and plastics, pharmaceuticals, and fabricated metal products — which form the backbone of Czech industrial supply chains.
New orders also ticked up: the value of orders in current prices rose 6.6% year-on-year, with foreign orders up 2.9% year-on-year and domestic orders jumping 13.0% year-on-year. Month on month, order values increased by 2.9%. The motor vehicle segment was the main driver of this demand impulse, helped by a low comparison base that pushed automotive figures up by roughly 15% year-on-year. Long-term contracts were also reported in other transport-equipment sub-sectors.
Construction in focus
Construction remained one of the clearest bright spots. Output increased by 10.1% year-on-year and by 1.0% month-on-month in July. The number of building permits issued rose sharply by 37.9% year-on-year, reflecting developers’ pipeline activity. Still, fewer homes were started and completed than a year earlier: dwelling starts fell by 9.2% and completions were down 13.4%.
Employment in construction edged up by 0.6% year-on-year, while average wage growth in the sector slowed to 3.8% year-on-year. Observers describe the building boom as being “still in its teenage years,” meaning rapid but not yet mature or stable.
Labour, pay and lending
Industry employment fell by 1.9% year-on-year, even as production rose, suggesting ongoing productivity shifts and sectoral reallocation. Average nominal wages in industry eased to 5.0% year-on-year, seen as monthly volatility rather than a durable trend change.
New mortgage lending hit a record high in the second quarter of the year, excluding the pandemic-era spike. That surge likely reflects households locking in attractive rates ahead of any pause in policy easing and continued solid housing demand, even as prices remain elevated.
Trade and outlook
At current prices, the foreign trade balance in goods showed a deficit of CZK 1.7 billion in July, narrower by CZK 5.5 billion versus the same month a year earlier. Exports grew by 4.7% year-on-year while imports rose by 3.1% year-on-year. The improvement was supported by stronger surpluses in motor vehicles, other transport equipment, and machinery.
Taken together, the data show industry is bottoming out and aligning with household spending and construction as engines of growth. Solid gains in new orders, strong construction activity, and healthy export momentum point to a favorable short-term outlook for builders, suppliers and exporters, even as employment patterns and wage volatility require monitoring.
Context and structural notes
The Czech economy’s manufacturing base has deep roots in automotive and heavy industry, and recent years have seen shifts toward defense and high-tech manufacturing as demand patterns change. The country has one of the highest per capita vehicle production rates in the world and an active arms sector that has expanded output in response to recent geopolitical demand. These structural elements influence construction needs — from industrial facilities and logistics to residential demand in worker hubs.
Bottom line for construction professionals
Builders and contractors can expect continued activity driven by a rising pipeline of permits and healthy household demand. Short-term constraints include a lower number of completed dwellings and workforce shifts across industry. Rising mortgage activity and stronger export orders add to the case for steady demand for both residential and commercial projects.
FAQ
What is driving construction growth right now?
Growth is driven by a sharp rise in building permits, steady household demand for housing, and spillovers from industrial investment linked to manufacturing and export activity.
Are fewer homes being built despite the construction boom?
Yes. Starts and completions of dwellings were lower year‑on‑year in July, even as overall construction output rose. This reflects timing differences between permit issuance, project starts and final delivery.
How do mortgages affect construction demand?
Record-high new mortgage lending earlier in the year supports housing demand, which can lift residential construction and renovation activity, though rising prices and borrowing costs remain factors to watch.
Is industry recovery good for construction firms?
Yes. Recovery in manufacturing and higher new orders often lead to higher investment in factories, warehouses and supporting infrastructure, creating opportunities for construction firms.
Should firms expect wage pressures?
Wage growth in construction has slowed compared with earlier periods, but employment in the sector rose slightly. Firms may still face localized wage pressures depending on skill needs and competition from other industries.
Key features at a glance
| Indicator | Change (July / latest) | Note |
|---|---|---|
| Industrial output (workday-adjusted) | +1.8% y/y | Recovery signs after earlier weakness |
| Industrial output (month-on-month) | +0.8% m/m | Short-term gain |
| New orders (total) | +6.6% y/y | Domestic orders up sharply |
| Construction output | +10.1% y/y | Double-digit annual growth |
| Building permits | +37.9% y/y | Large pipeline of projects |
| Dwelling starts / completions | -9.2% / -13.4% y/y | Timing mismatch with permits |
| Foreign trade in goods | Deficit CZK 1.7bn (narrower) | Exports outpaced imports |
| Mortgage lending | Record high in 2Q | Support for housing demand |
Deeper Dive: News & Info About This Topic
Additional Resources
- ING Think: Czech industry joins the growth pack
- Wikipedia: Economy of the Czech Republic
- Encyclopaedia Britannica: Czech Republic — Economy
- Google Search: Czech Republic economy 2025
- MLex: USITC preliminarily says Indian, Czech freight rail couplers threatened industry
- Google Scholar: Czech freight rail couplers USITC
- Deutsche Welle: Are weapons — not cars — the future engine of the Czech economy?
- Encyclopaedia Britannica: Czech defense industry
- ASDNews: BAE rolls out newest combat vehicle for Czech army
- Google News: BAE combat vehicle Czech army
Author: Construction NY News
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at constructionnynews.com, your go-to source for actionable local news and information in New York and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the New York Build Expo, infrastructure breakthroughs, and cutting-edge construction technology showcases. Our coverage extends to key organizations like the Associated General Contractors of New York State and the Building Trades Employers' Association, plus leading businesses in construction and real estate that power the local economy such as Turner Construction Company and CMiC Global. As part of the broader network, including constructioncanews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic construction landscape across multiple states.
