March data for the Czech Republic have rounded off a very strong first quarter. Retail sales (excluding cars) improved by a handsome 2.5% qoq in Q1 15, an even better result than Q4 14's +2.1%.
There were also positive developments in the industrial and construction sectors, where improvements should mirror Q1 GDP growth (to be released this Friday). The above-consensus forecast looks for GDP to grow by 1.2% qoq. March industrial production rose by a very decent 6.2% yoy.
The automotive industry remained the main driver of the sector, increasing by 8.5% yoy in March and contributing 1.5 pp to the headline figure. In Q1 15, industrial production grew by 4.6% yoy, and the positive trend should continue throughout the whole of 2015.
Industrial production to grow by 6.5% this year and 7.6% next year, says Societe Generale. It is being supported by a revival in demand among the country's main export partners and strengthening domestic demand. The Czech Statistical Office's confidence indicators and the PMI index also confirm the positive outlook for the sector. Although April's PMI index fell to its lowest level since the beginning of the year (54.7 points), it remains safely in the expansionary zone, promising further robustgrowth.
Construction sector posts excellent results for March. Growth in the sector jumped sharply by 8.4% yoy, the strongest print since September 2014. The positive growth dynamic should continue throughout the rest of the year. The sector is benefiting from expenditure on infrastructural construction and the revival of the housing market. Societe Generale expects it to grow by7.9% this year and 6.6% next year.
Retail sales (excluding cars) disappointed slightly in March, declining by 0.7% mom. Some degree of correction had, however, been expected due to robust sales at the turn of the year (the reading increased by a strong 3.2% in December and January). But the sales grew by a handsome 2.5% qoq in Q1 15, an even better result than Q4 14's +2.1%. All factors point to strong growth in household consumption in Q1 15, as was the case in Q4 14. Household consumption likely increased by 0.8% qoq in Q1 15, according to the Societe Generale estimates.
