The KSH in a second reading confirmed the preliminary figure that showed output contracting 7.3% y/y in (chart) in September and by 5.8% when adjusted for the number of workdays.

In a month-on-month comparison, output rose a seasonally- and workday-adjusted 1.2%, beating forecasts. This could be attributed to export sectors returning to full capacity after the summer shutdowns.

The detailed data show output of the electrical equipment segment, which made up 12% of manufacturing output, inched up 2.0%. The output of the computer, electronics and optical equipment segment, accounting for 10% of manufacturing, fell 18.2%. The output of the food, drinks and tobacco segment, which made up 13% of the manufacturing sector output, slipped by 9.7%.

In absolute terms, industrial exports reached HUF5.9 trillion, with sales accounting for 62% of the total.

 

Domestic sales of industry fell by 16.4% in September, and the volume of industrial exports was 7.7% lower than a year earlier.

The prevailing trends in the sector remained unchanged. The positive performance of the automotive and battery industries has not been able to offset the double-digit drop in output in manufacturing sectors producing for the domestic industry, which have to cope with high energy prices and weak domestic demand.

The order stock was 0.3% higher at the end of September than in the base period, while new orders fell 10.1% y/y.

The short-term outlook for output remains rather cloudy, with business sentiment indices across Europe pointing downwards, and the weakness of the German economy, the country’s largest trade partner, is bad news for Hungary.

Industrial investments remain steady, boosting manufacturing capacities in the automotive sector, with a string of investments going to the EV battery industry. This will give a boost to Hungary’s industry in 2024. This year, the sector will negatively contribute to GDP, as output dropped 4.9% y/y in the first nine months. Industrial output grew by 6.1% in 2022.