Hungary: Industrial output expands by 7.8% y/y in April

 Industrial output increased by 7.8% y/y in April and recovered from the 2.4% y/y contraction in the previous month, the statistical office (KSH) published detailed industrial figures. The print was unrevised from the preliminary estimate released earlier. The dip of industrial activity in March and the subsequent recovery in April were influenced by calendar effects from the Easter holiday, in our view. In calendar-adjusted terms, industrial output growth also picked up in April but its performance in Mar-Apr remained relatively weak, which seemed mostly related to external demand. We think that industrial exports continue to be hampered by the restructuring in some local car plants while the general external environment remains supportive for industrial exports. We expect that the recent weakening of the forint should also boost exports going forward although a significant recovery should not be expected until the local car industry gains full steam, likely in H2.

In seasonally- and calendar-adjusted terms, industrial output expanded by 0.2% m/m in April. The adjusted output trend, however, seemed to have flattened in the past few months.

Almost all industrial sectors and branches showed stronger output figures in non-adjusted terms in April. The utility sector and the refined petroleum industry were the small exceptions, suggesting strong underlying deterioration in their performance given the favourable calendar effect for the month. Utility output was likely hit by an unusually warm weather during the month, in our view. Output of the largest industry, the transport equipment branch, recovered to 7.5% y/y growth in April. The growth was mainly on account of production of car parts while vehicle output rose by just 1.3% y/y, which we take as confirmation that car production remained a drag on growth during the month.


Total new industrial orders rose by 8.3% y/y in non-adjusted terms in April. New orders expectedly improved on the back of the calendar effects but we think they remained overall subdued, signalling that industrial output does not have much of an upward potential in the next two-three months. New domestic orders rose by 4.6% y/y and showed continued strength of domestic demand while new external orders were up by 8.9% y/y.

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