The volume of Hungary’s industrial production decreased by 1.2% month on month in June. IP was up by a modest 3.1% in annual terms, the Central Statistical Office (KSH) reported on Tuesday.
The monthly IP readings are not overly high this year, but looking at them from a distance it seems that output is on a balanced, steady path.
The situation is nuanced, though, as this year’s figures still do not reflect the impact of the traditionally summer recess when large manufacturers cut back production almost every year, sometimes in July, and less frequently in August. The production "gap" was particularly large last July. Hence, the million dollar question for the next few months is whether the above phenomenon will occur this year as well or not. If it doesn’t, the July print may be nice (at least the yr/yr indices) and it could improve the modest 3.5% IP growth of the first half.
KSH statistician Márta Paczári said the main increase occurred in electronics, while growth in the food industry was about average and the automotive sector fared weaker than average. (This offers little new information, though, as the stats office tends to cite slowly moving annual indices in its first releases and the above sectors have been showing largely the same profile so far.)
Péter Virovácz, chief analyst at ING Bank in Budapest, added that the feeble performance of Germany’s industrial sector has apparently influenced Hungary’s industry, as well.
This will quickly shush the euphoria caused by the BWM announcement, as the industry is apparently shifting down rather than up.
He added, however, that as new capacities will be added in the following months (Audi) he expects car manufacturing to find its footing again and industry can finally shift into a higher gear.
The second quarter shows hardly any increase compared to January-March therefore the sector will likely make a humble contribution to GDP growth. Front page photo by MTI / Attila Balázs