Following two months of decline, Hungarian industry returned to growth in November, but growth was capped at just 0.6%, in both adjusted and non-adjusted terms, data from the statistics office KSH showed on January 6.
Although the reading represents a slight improvement compared to a 2.1% drop in industrial output seen in the previous month, the continued poor performance of industry suggests the economy is unlikely to meet the government’s target of 2.5% for full-year GDP growth. The result is disappointing in comparison with stronger recoveries across the region.
Hungarian industry has seen an erratic year, mainly due to the ill-effects of the auto sector’s struggles. In November, the car industry was again the main culprit for weak output, KSH said in a statement. At the same time, the manufacture of computers and electronic equipment performed better than in previous months.
In monthly terms, output increased 0.6% in November. The results leave industrial output in the first eleven months of 2016 1% higher in annual terms. KSH will issue a detailed estimate on January 12.
Looking ahead, although confidence in industry increased both in November and December, a sharp decline in PMI and pauses in production at the Hungarian factories of German carmaker Audi suggest that the final month of the year will also present subdued results.
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 predicts in a note.