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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
Yes. Recovery in manufacturing and higher new orders often lead to higher investment in factories, warehouses and supporting infrastructure, creating opportunities for construction firms.
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.
| 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 |
, 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…