The struggle of the carmaking sector to stabilize output remains the main culprit for the continued poor performance of Hungarian industry, data for December released by statistics office KSH on February 14 confirmed.

Following a return to growth in November - even if feeble - Hungarian industry slumped back into decline in December. Output decreased 0.5% y/y in non-adjusted terms, KSH said, confirming its preliminary estimate.

That leaves the full-year industrial output in 2016 just 0.9% higher in annual terms. The reading is hugely disappointing compared to the impressive 7.5% expansion seen in 2015.

The struggles were mainly due to a bumpy year for the auto sector. In December, the production of transport equipment – representing a full 24% of Hungarian manufacturing output – declined 6.9% y/y. The manufacture of motor vehicles dropped 10.9%, while output of parts and accessories declined 1.9%.

At the same time, the manufacture of food products, beverages and tobacco products – accounting for more than 12% of manufacturing – went up by 1.9%. The manufacture of computers and electronic equipment performed better than in previous months, growing 3.4%.

Also on the bright side, output increased 0.5% in monthly terms in December, which represents the the third monthly increase in a row. A steady recovery of economic sentiment and a strong PMI reading in January offer hope for a pick-up of Hungarian industry in 2017. However, a 2.1% y/y decline in the number of total new orders somewhat dents the optimism.