Czech may data from real economy to signal continuing strong expansion…

The Czech Republic has seen a strong acceleration in economic activity over the past few months, which has been mainly driven by domestic demand. Indeed, the improving labour market, incrases in wages, fiscal expansion, and low inflation will likely have resulted in May retail sales (ex auto) increasing by 0.4% mom (SWDA). 

On a yoy basis, retail sales should be up a solid 7.0%. It is not only private consumption behind the economic pickup. The government's fiscal expansion and the massive inflow of EU funds have been boosting the construction sector. Its output should rise by a massive 13.8% yoy in May.

The turnaround in interest rates development and thus in mortgage rate expectations have likely contributed to the rise in the construction of buildings.

Domestic economic expansion and an improvement of the situation in Germany should be reflected in the growth of industrial production by 1.0% mom in May. The automotive industry should fare particularly well, as the number of cars produced increased a whopping 9.2% mom (SWDA) in May. 

The whole sector should post a 4.9% yoy expansion with the adverse effect of a lower number of working days, says Societe Generale.