Output of Hungary's industrial sector fell 1.3% y/y (chart) in July and by 6.4% when adjusted for the number of workdays, the Central Statistics Office (KSH) confirmed in a detailed release of data on September 13.

Domestic industrial output has essentially stagnated or slightly declined since mid-2022. Short-term production prospects remain bleak, with economic indicators across Europe showing only faint signs of recovery, analysts said.

The 6.4% decline was the steepest drop among EU members, but two extra days in the base period explain the big gap in the two figures

Industrial production was flat compared to June and showed a 3% decline in January-July.

Production increased in seven of the 13 manufacturing sub-sectors in annual basis, however sectors with the biggest weight underperformed. Output of the automotive sector, with a 26% weight, shrank 10% at the same clip as the electrical equipment sector, which has a 10% weight.

 

 

After a decline in the previous month, output of food, beverage, and tobacco product manufacturing, which represents 13% of the manufacturing industry, increased by 3.2% compared to the previous year, driven by growth in both domestic and export sales.

The stock of new order in manufacturing sectors decreased by 2.7% year-on-year as new domestic orders fell by 9.2%, while new export orders declined by 1.5%. As a result, the total order backlog was 27% lower than a year earlier at the end of July. Industrial output declined 3% year-on-year in the period January-July.

The National Economy Ministry blamed sanctions and the weak German economy for the weaker performance of the industry. The cabinet is working to offset negative market trends with new state-subsidised lending schemes to support Hungarian SMEs.

The broader picture for 2024 remains bleak and without a meaningful uptick in demand, either domestically or through export, the industrial sector could be a drag on GDP this year, ING Bank writes in a note.