The average nominal wage in the Czech Republic rose by 6.4% yoy in 2Q26, following a 6.1% increase in 1Q, which was revised down from the originally reported 8.1% yoy. From a sectoral perspective, the public sector saw higher growth over the past year, with salaries rising by 6.9% yoy, while wages in the private sector increased by 6.1% yoy. Adjusted for inflation, the purchasing power of the average monthly wage rose by 4.3% yoy in 2Q26.

The average nominal wage in the Czech Republic rose by 6.4% yoy in 2Q26, following a 6.1% increase in 1Q, which was revised down from the originally reported 8.1% yoy. From a sectoral perspective, the public sector saw higher growth over the past year, with salaries rising by 6.9% yoy, while wages in the private sector increased by 6.1% yoy. Adjusted for inflation, the purchasing power of the average monthly wage rose by 4.3% yoy in 2Q26.

A significant downward revision of 1Q26 data eases pressure on the CNB. Wage growth in 1Q presented a significant pro-inflationary surprise. However, following today’s publication of a 2pp downward revision in the yoy growth rate of wages for 1Q26 — which, according to the Czech Statistical Office (CZSO), is related to the introduction of a new data source — the overall pro-inflationary impact of the labour market this year is significantly smaller than previously thought. Consequently, 2Q statistics fell short of estimates in terms of yoy growth. Both the market consensus and our forecast anticipated a 7.2% yoy increase in nominal average wages, while the central bank projected a 7.3% increase. On the other hand, wage ‘momentum’ — expressed as the seasonally adjusted qoq growth in average nominal wages — remains elevated, as our estimate shows that qoq growth accelerated from 1.5% in 1Q to 2% in 2Q. However, it cannot be ruled out that data uncertainty regarding wages will persist for the remainder of the year. The central bank may therefore interpret these statistics with caution and place greater emphasis on national accounts data or inflation trends when setting monetary policy.

Although gross real wages have surpassed the pre-pandemic level from 4Q19, they have not yet reached their all-time high. On a seasonally adjusted qoq basis, gross real wages have risen continuously for over three years, offsetting their decline from 2021 to 2023. However, gross wages may have overstated the decline in purchasing power. This is because the inflation wave affecting net wages was partially offset by a reduction in labour taxation (through the abolition of the ‘super-gross wage’ system) in 2021. The increase in employees’ purchasing power is also reflected in household consumption, which, along with fixed investment, remains one of the two main drivers of yoy growth in the domestic economy from an expenditure perspective this year.

We believe that wage growth will gradually slow down. We expect the deceleration to be driven by the convergence of labour productivity and real wage trends, the easing of labour market tightness (as evidenced by a gradual increase in unemployment), and tight monetary conditions. Overall, we expect nominal wage growth to average above 6% for the full year (barring any further significant revisions to the data), while it could fall below that level next year.

The structural shift toward a higher share of employment in the services sector at the expense of industry is continuing. The total number of employees, adjusted to full-time equivalents, rose by 0.1% qoq (and by 0.7% yoy) in 2Q after seasonal adjustment. The trend of rising employment in services continued, while the qoq decline in manufacturing employment resumed— a trend that has persisted for four years, with the exception of 1Q26.

CEZ announced its results for 2Q26, with net profit rising by +8% yoy, but falling short of market expectations. This was primarily due to the revaluation of trading instruments. Conversely, CEZ increased output at its nuclear and coal-fired power stations, while its Distribution division also performed better. CEZ also demonstrated a strong ability to generate free cash flow (WFT-free). The company's management has raised its FY targets for both EBITDA and net profit.  

CEZ announced its results for 2Q26, with net profit rising by +8% yoy, but falling short of market expectations. This was primarily due to the revaluation of trading instruments. Conversely, CEZ increased output at its nuclear and coal-fired power stations, while its Distribution division also performed better. CEZ also demonstrated a strong ability to generate free cash flow (WFT-free). The company's management has raised its FY targets for both EBITDA and net profit.  

Revenue for the second quarter totaled CZK74.7bn. This represents a slight yoy increase of +0.8%. However, EBITDA fell by 23% yoy to CZK23.8bn. This is 8.7% below the consensus estimate. As expected, the decline in EBITDA was negatively impacted by lower electricity prices, which affected the Generation segment. This sector also recorded a loss from Trading where positions were revalued. However, Mining and Distribution both saw yoy growth. Net profit, adjusted for exceptional items and non-controlling interests, increased by +8% yoy to CZK4.3bn. As anticipated, this growth was driven by a substantial decrease in the effective tax rate, due to the absence of a special tax (WFT).

The leverage ratio, measured as net debt to EBITDA, remained unchanged at 1.6x on a quarterly basis. However, both debt and cash increased due to the dividend payment in August.

Guidance for 2026: CEZ has once again increased its targets for this year. This is based on higher electricity prices, which are set to rise to EUR106–110MWh (previously EUR104–108MWh), higher output from nuclear power stations, and higher profits in the Distribution sector. According to the new forecast, EBITDA is expected to reach CZK109–114bn (+1.8% compared to the previous forecast of CZK107–112bn), while net profit is expected to reach CZK31–35bn (+3.1% compared to the previous forecast of CZK30–34bn).

According to our model, EBITDA should total CZK112.5bn, while net profit should total CZK37.4bn. The market is expecting CZK112.6bn and CZK36.8bn respectively.

The results reported for 1H26 represent 53% of CEZ’s revised full-year target for EBITDA and 54% for net profit (mid-range).

Compared with previous expectations, the estimated output from the gas-fired power station and the nuclear units has increased. Conversely, the outlook for renewable energy sources has been revised downwards.