Czech Republic's real sector indicators disappoint

Czech Republic's monthly indicators for August turned out to be weaker-than-expected. Industrial output of the country increased by 6.3%y/y vs. 9.1% consensus expectation; construction activity decelerated from 12.3%y/y to 4.7% in August; and retail sales, ex-autos, recorded 3.3%y/y increase vs. 6.2% expectation. 

These readings follow two months of decline in the PMI. These readings are monetary policy and FX neutral in the short-term. The country is likely to post 4% GDP growth for this year because of the strong growth already recorded for H1, but with the data-flow turning weaker and, now, uncertainty prevailing in the crucial auto sector because of the emissions scandal, a slower growth rate of c.2.5% is likely in 2016, says Commerzbank.