Hungarian industrial output declined for a second consecutive month in October, decreasing 2.1% y/y, in both adjusted and non-adjusted terms, data from the statistics office KSH showed on December 6.

Hungarian industry has struggled to raise its game to help consumption make up for an expected weak 12 months of investment from the very start of the year. Despite an upward revision of Q3 GDP growth to 2.2% y/y the same day, the poor start for industry to the final three months of the year suggests the economy is unlikely to meet the government’s target of 2.5% for full-year growth.

Production declined in all subsections, including the vital carmaking sector. At the same time, encouraging PMI readings in the previous months, together with an increased sentiment in industry offer hope for a slight improvement in the next month.

Hungarian industry has seen an erratic year, mainly due to the ill-effects of the auto sector’s struggles. Industrial output has increased in only four months of 2016, while drops have been recorded in six.

While a rebound in industrial production in August had raised hope that the industrial sector may be set to find its footing, it was followed by a disappointing drop in September’s and October’s output. The latest result leaves industrial output in the first ten months of 2016 just 1.1% higher in annual terms.

On a monthly basis, output in October increased 2%. Analysts at ING and Takarekbank expect that the industrial sector will somewhat pick up in November, whereas December might again present subdued results due to the planned decrease in production at the Hungarian factories of German carmaker Audi.

“Together with retail sales figures for October (…) industrial production indicate that beginning of the fourth quarter has been quite weak and that GDP growth may not accelerate more significantly,” analysts at KBC warn in a note.