Czech retail sales rose more than expected in July 2013 helped by strong auto sales and favourable calendar effects, data from the statistics office showed. Retail sales increased by 4% in July, following a 2.5% decline in the previous month. Analysts polled by Reuters were expecting sales to grow by 2.7% y/y.

On a working day adjusted basis, retail sales in the seventh month of 2013 edged up by 0.7% y/y, the same as seasonally-adjusted sales. The statistics office said July had two more working days than in the same month the previous year.

Sales and repairs of motor vehicles rose by 10.7% y/y in July, the strongest pace since February 2011 and well above June's rise of 0.1%. Seasonally-adjusted auto sales went up by 0.3% m/m and workday-adjusted sales advanced by 4.4% y/y.

Retail sales, including automotive fuel, grew by 1.4% y/y in non-adjusted terms in July, after falling by 3.6% in June. Seasonally-adjusted sales were 0.7% higher on the month in July, while when adjusted for working days they dropped 0.7% y/y.

IntelliNews comment: The fact that Czech retail sales resumed growth in July is an encouraging sign that consumer confidence is starting to recover helping the economy exit its record-long recession. The Czech economy has just emerged from an 18-month slump with the GDP rising by 0.6% q/q in Q2. According to Q2 GDP data released by the statistics office on Sept 3, household demand, which used to be the main drag on growth in 2012, increased for the second straight quarter - up by 0.5% y/y. Yet, the growth in retail sales will be restrained by falling real wages. In Q1 real wages in the country fell by 2.2% y/y, following a 0.7% rise in the fourth quarter of 2012.