Industrial output increased by 8.8% y/y in May, recovering from the 3.0% y/y contraction in the previous month, the statistical office (KSH) reported preliminary data. The recovery was partly due to Easter holiday effects in play for the previous month but calendar-adjusted output growth picked up as well. In seasonally- and calendar-adjusted terms, output was up by 2.3% m/m in May and extended the upward trend in the industry, starting from Q4/2016.
Overall, we think that the data supports our expectations that the weak industrial print for April was only temporary and the outlook for this year remains favorable. We expect the industry to continue growing at a healthy pace in the next months, boosted by accommodative external demand conditions as well as by the opening of new export capacities. A low base effect in the local car industry from last year should also contribute to some further growth of the sector, in our view.
The KSH is due to publish the detailed industrial output data for May on Jul 12.