Following five straight months of m/m decline in a row, Hungary's industrial production returned to growth in April, statistics office KSH reported on June 14. The release confirmed a preliminary estimate from earlier this month.
Unadjusted industrial production increased 5.4% m/m and 5.3% y/y in the fourth month of the year. While the extended turn of the year slowdown in industrial production – mainly due to a drop in the auto sector – contributed to feeble GDP growth in Q1, a recovery in the industrial sector should help improve the economic outlook for the second quarter.
The two-year average for Hungary's industrial output growth is around 7%, and expansion peaked at 12.7% in October. However, industrial production increased just 0.3% y/y in Q1 2016.
Adjusting annual output in April made no difference to the figure, after producing a 2.4% y/y decline in March.
In its detailed second estimate, KSH showed that performance improved in all segments of industry in April, except for the food sector, which recorded a 3.5% y/y decline. However, the stabilisation of growth mainly reflects a recovery in the auto segment.
The manufacture of parts and accessories for motor vehicles grew at a rate of 12.2% y/y, although the manufacture of motor vehicles increased no more than 2.7%. That, however, following a remarkable 14.4% drop in March. Output decreased to at least some degree in the first quarter due to technical switchovers at Audi and Suzuki.
Carmaking drove impressive growth in industrial output last year. However, it is becoming clearer that the potential of carmaking to unbalance the entire industrial sector is an issue for Budapest. In March, it was mainly the lull in automaking that drove industry data into the ground.