The volume of Hungary’s industrial production dropped 0.1% month on month in April, which means a break in a six-month streak. The orders data were also somewhat weak, but it is too early to start worrying about the sector.
Hungary’s industry stopped in its tracks at a new production peak in April and failed to expand compared to the previous month (-0.1%). After a major rise there is nothing strange about this. The monthly zigzags are only natural and do not mean a break in the ascending trend.
Porduction of vehicle manufacturing, which has a large weight in the index, rose further, whereas the manufacture of machinery and equipment, pharmaceuticals and chemicals, and food contracted. As you can see on the charts below, the expansion of the sector remains rather asymmetric.
In April 2015, total new orders in the observed branches of manufacturing grew by 5.6% compared to the same month of the previous year. This is not exactly robust, but still signals growth. The volume of new domestic orders rose by 10.6%, while that of new export orders increased by 4.8%. The volume of total stock of orders was above the level of April 2014 by 12%. This is not overly high either. Over the last 15 months the rate of the increase was higher.
Despite the weaker April readings we should not worry about the industrial cycle just yet. The IP performance in the first quarter was greatly over expectations and even if the following months do not turn out so well, the sector still had a rather swell first half. The key question is rather whether the one-sided growth will be replaced by a more symmetrical one in the next quarters.
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