Czech consumer confidence turned positive for the first time in more than seven years, adding to signs that the central bank’s yearlong effort to keep the koruna weak spurred household demand by helping avert deflation.
The consumer-confidence index rose to 1.3 in November from minus 2 the previous month, the Czech Statistics Office said in a statement on its website.
That’s the first positive reading since March 2007. The monetary authority intervened on the currency market last November to revive the economy after a record-long recession by motivating consumers to spend instead of delaying purchases in anticipation of lower prices.
Policy makers now want to keep a cap on koruna gains in place until the first quarter of 2016 as a worsening outlook in the euro area weighs on Czech economic growth and inflation.
“It’s encouraging to see that our main trading partner’s weakness hasn’t significantly echoed through the domestic economy,” Jan Bures, an economist at CSOB AS in Prague, said in an e-mailed note.
“But without a positive turnaround in the euro zone, Czech optimism, as was the case in the past, will be only short-lived.”
The Czech Republic relies on the other 27 members of the European Union to buy about 80 percent of its exports, including products by companies such as carmaker Skoda Auto AS, a unit of Volkswagen AG.
Price growth has accelerated this year, with the central bank crediting its Swiss-style currency ceiling for staving off deflation.
The Czech economy grew 0.3 percent in the third quarter from the previous three months, marking the sixth consecutive period of expansion.
The business-confidence indicator rose to 12.3 in November from 11.5 a month earlier, and the composite gauge for business and consumer sentiment improved to 10.1 from 8.8. The measures may range from minus 100, if all respondents are pessimistic, to 100, if all are optimistic.
bloomberg.com
The consumer-confidence index rose to 1.3 in November from minus 2 the previous month, the Czech Statistics Office said in a statement on its website.
That’s the first positive reading since March 2007. The monetary authority intervened on the currency market last November to revive the economy after a record-long recession by motivating consumers to spend instead of delaying purchases in anticipation of lower prices.
Policy makers now want to keep a cap on koruna gains in place until the first quarter of 2016 as a worsening outlook in the euro area weighs on Czech economic growth and inflation.
“It’s encouraging to see that our main trading partner’s weakness hasn’t significantly echoed through the domestic economy,” Jan Bures, an economist at CSOB AS in Prague, said in an e-mailed note.
“But without a positive turnaround in the euro zone, Czech optimism, as was the case in the past, will be only short-lived.”
The Czech Republic relies on the other 27 members of the European Union to buy about 80 percent of its exports, including products by companies such as carmaker Skoda Auto AS, a unit of Volkswagen AG.
Price growth has accelerated this year, with the central bank crediting its Swiss-style currency ceiling for staving off deflation.
The Czech economy grew 0.3 percent in the third quarter from the previous three months, marking the sixth consecutive period of expansion.
The business-confidence indicator rose to 12.3 in November from 11.5 a month earlier, and the composite gauge for business and consumer sentiment improved to 10.1 from 8.8. The measures may range from minus 100, if all respondents are pessimistic, to 100, if all are optimistic.
bloomberg.com
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