The struggle of the carmaking sector to stabilize output was once again responsible for the continued poor performance of Hungarian industry in November, data from statistics office KSH showed on January 12.
Following two months of contraction, Hungarian industrial production returned to growth in November, but the expansion was capped at just 0.6%, in both adjusted and non-adjusted terms, KSH said, confirming its preliminary estimate. Although the reading represents a considerable improvement over the 2.1% drop the previous month, the result is disappointing in comparison with stronger recoveries for the sector across the region.
In monthly terms, output increased 0.6% in November. The results leave industrial output in the first eleven months of 2016 just 1% higher in annual terms.
Hungarian industry experienced an erratic year, mainly due to the auto sector’s struggle. In November, the production of transport equipment – representing a full 30% of Hungarian manufacturing output – declined 2.5% y/y. The manufacture of motor vehicles dropped 6.2%, while output of parts and accessories rose 2%.
At the same time, the manufacture of computers and electronic equipment - which has the second largest weight in overall output - performed better than in recent months, increasing 10.6%.
Also on the bright side, the total number of new orders in industry grew 9.2% y/y, and new export orders gained 11.2%. That, added to improved confidence indicators in industry, offer hope for a recovery this year.
Industrial output is expected to slightly increase in 2017, but will remain well below the 7-8% y/y growth rate seen in 2014 and 2015, Gergely Urmossy at Erste Bank predicted in a note.