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.
Czech industrial output picks up in July as broad manufacturing gains push new orders higher and construction stays strong
July brought clearer signs that the Czech economy is gaining momentum. Industrial output rose faster than in recent months, with working-day adjusted production up 1.8% year-on-year and 0.8% month-on-month. On an unadjusted basis, output was 4.9% higher than a year earlier, a reading stronger than many expected.
The broad manufacturing improvement was led by several core sectors that form the backbone of Czech industry and its supply chain. Motor vehicle manufacturing, machinery, chemicals and plastics, pharmaceuticals, and fabricated metal products all recorded robust gains in July. These gains helped lift the value of new orders, which rose 6.6% year-on-year and 2.9% month-on-month.
The pickup in orders was driven mainly by the motor vehicle sector. Automotive orders posted a punchy near-15% annual increase in part because last year’s low base made growth look larger. Companies that make other transport equipment also won significant long-term contracts during the period, supporting forward demand.
Jobs, pay and household demand
The recovery in output and orders did not translate into a big jump in industrial employment in July. The average number of employees in industry fell by 1.9% year-on-year. Average monthly wages in industry eased to 5.0% year-on-year, a softening seen as part of monthly volatility rather than a clear turn in the trend.
In construction, the story was stronger on activity and milder on pay. Construction output rose 10.1% year-on-year and was 1.0% higher month-on-month. The average number of construction employees increased by 0.6% year-on-year, while average wage growth slowed to 3.8% year-on-year. The building pipeline also showed signs of strength: the indicative value of building permits issued climbed 37.9% year-on-year, although fewer new homes were started and completed in July compared with a year earlier (starts down 9.2%, completions down 13.4%).
Housing and lending
Housing demand appears resilient despite rising prices. New mortgage lending reached a record high in the second quarter of 2025 when excluding the pandemic-era spike. That surge in lending may reflect households trying to lock in attractive borrowing rates before policy moves slow rate cuts, or simply continued strong demand for housing.
Trade and export outlook
Preliminary foreign trade figures for July showed a goods deficit of CZK 1.7 billion at current prices, improving by CZK 5.5 billion compared with a year earlier. Exports rose by 4.7% year-on-year, while imports increased by 3.1% year-on-year. A higher surplus in trade of motor vehicles, other transport equipment, and machinery was the main factor helping the trade position. Solid growth in new orders points to a favorable outlook for Czech exporters in the months ahead.
Where industry stands and what’s next
Taken together, July’s numbers suggest that industry may be bottoming out and joining two other engines of growth: household consumption and construction. Wage dynamics showed some softening this month, but that move is seen as part of normal monthly swings and does not change the expectation for generally robust wage growth going forward. Overall, the economy is moving on a solid footing with several manufacturing sectors contributing to momentum.
Background context
The Czech Republic’s industrial strength rests on decades of manufacturing tradition and a well-educated workforce close to western markets. Over recent years the country has been a major producer of cars per capita and has a sizable defense and arms manufacturing base that expanded significantly after demand shifted in the region. The structure of the economy—mixing industry, advanced agriculture and a strong services sector—helps explain the current resilience.
Bottom line
July delivered a clearer upturn in industrial activity, stronger new orders and continued momentum in construction. Export growth and a narrower goods deficit also support a positive near-term outlook. Employment and wage patterns vary by sector, but the overall picture is one of gradual improvement and steadier foundations for growth.
Frequently asked questions
Q: How much did industrial output grow in July?
A: Working-day adjusted industrial output increased by 1.8% year-on-year and 0.8% month-on-month in July. Unadjusted output rose 4.9% year-on-year.
Q: Which industries led the growth?
A: Robust gains were recorded in motor vehicles, machinery, chemicals and plastics, pharmaceuticals, and fabricated metal products.
Q: What happened to new orders and trade?
A: The value of new orders rose 6.6% year-on-year and 2.9% month-on-month. Exports grew 4.7% year-on-year and imports 3.1%, with the goods deficit narrowing to CZK 1.7 billion.
Q: Is construction still growing?
A: Yes. Construction output rose 10.1% year-on-year and 1.0% month-on-month. Building permits rose sharply, though fewer homes were started and completed compared with a year earlier.
Q: What do the jobs and wage numbers show?
A: Industrial employment fell about 1.9% year-on-year, while construction employment rose 0.6%. Wage growth softened to 5.0% in industry and 3.8% in construction in July.
Key figures at a glance
| Indicator | July change (YoY) | July change (MoM) | Notes |
|---|---|---|---|
| Industrial output (working-day adjusted) | +1.8% | +0.8% | Unadjusted output +4.9% YoY |
| New orders (value) | +6.6% | +2.9% | Foreign orders +2.9% YoY; domestic +13.0% YoY |
| Construction output | +10.1% | +1.0% | Building permits +37.9% YoY; dwelling starts -9.2%, completions -13.4% |
| Trade in goods | Exports +4.7% / Imports +3.1% | — | Goods deficit CZK 1.7bn, improved vs last year |
| Employment | Industry -1.9% / Construction +0.6% | — | Wage growth: Industry 5.0%, Construction 3.8% (YoY) |
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 CA News
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