A rebound of the vital carmaking sector helped Hungary’s industrial output return to growth in August following two months of decline, data from the statistics office KSH showed on October 12. Overall output increased 11.1% y/y in unadjusted terms, confirming a flash estimate from a week earlier.
The ill-effects of the auto sector’s struggle to stabilize had been evident throughout the year. The rebound in carmaking in August – together with an encouraging PMI reading in September – offers glimmers of hope that the industrial sector is now finally stabilising.
At the same time, the increase in August was largely driven by three extra working days in the month, and calendar-adjusted data shows growth limited to 3.5% y/y. In monthly terms, output increased 1.6% in August. The result leaves industrial output in the first eight months of 2016 2.3% higher in annual terms.
Hungarian industry has shown erratic form this year. While an extended turn of the year slowdown contributed to feeble GDP growth in Q1, an increase in industrial output in April and May helped to push second quarter economic expansion to 2.6%. At the same time, the struggling carmaking sector dragged on Hungarian industry in June and July, resulting in a drop in industrial output in both months.
The production of transport equipment – representing 28% of Hungarian manufacturing output – grew by 16.6% in August, compared to an 8.5% decline in the previous month. The manufacture of motor vehicles rose 17%, while output of parts and accessories increased 15.7%.
New export orders of motor vehicles also increased 13.1%, which offers hopes for a long-term recovery of the sector. Overall, the volume of industrial export sales grew by 9.5% compared to the same period of the previous year.
While carmaking drove impressive growth in industrial output last year, it is becoming clearer that the potential of the auto segment to unbalance the entire industrial sector is now an issue for Budapest.