Sales in services increase by slower 0.7% y/y in Czech Republic

Sales in services rose by slower 0.7% y/y in Q2, after a revised 1.0% growth in Q1 and 2.9% surge in Q4’15, according to the constant price data released by the Czech stats office today. Sales growth in one of the main segments transportation and storage accelerated to 2.8% y/y and growth of sales of information and communication also quickened to 2.8% y/y. However, this improvement was offset by slower increase of sales in hotels and restaurants, real estate, administrative and support services as well as deeper 6.0% decline in sales of professional, scientific and technical activities.

Overall, the recently released data are mixed with industry and retail sales improving in Q2 and tourism, services and construction sectors worsening compared to Q1. We recall that the Czech economy rose by a surprisingly strong 3.0% y/y in Q1, while monthly real sector data suggest it could keep that pace into Q2. Flash GDP estimate is due on Tuesday (Aug 16). The CNB’s latest forecast assumes GDP growth to decelerate to 2.1% y/y in Q2 and 2.0% y/y in Q3 before picking up to 2.5% y/y in the last quarter of 2016.

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