Hungarian industrial production remained stuck in a rut in the second month of 2016, an initial estimate released by statistics office KSH on April 6 showed.

While unadjusted industrial production showed growth of 6.3% in February, following a drop of 0.2% y/y in January, output fell 0.8% m/m in adjusted data. That marked the fourth straight monthly decline in a row, extending speculation that Hungarian industry may be feeling the effects of the stuttering Eurozone recovery, rocky emerging markets, and reduced absorption of EU funds.

Similarly, adjusted annual output managed a rise of just 1.8% y/y in February, following a 2.2% increase in January. Both came as a huge disappointment compared with recent results and expectations, following a 6.8% increase in out put in December. The two-year average is around 7%; growth peaked at 12.7% in October.

KSH noted that the production in the automotive sector stagnated in February, as did output by the food sector. The auto sector in particular drove the impressive growth last year thanks to new investment. While that suggests it will struggle to keep up the torrid pace of expansion seen in 2015, the reasons for an apparent slump at the start of the year is hard to pinpoint. The energy sector saw a contraction, according to preliminary estimates. Detailed data will be published on April 13.

The slowdown in the first two months of the year matches to some degree the country's purchasing manager index (PMI). The forward-looking survey dropped below the 50-point threshold seperating expansion from contraction in December. The 49.1 point reading was the lowest in two and a half years.

The Hungarian Association of Logistics, Purchasing and Inventory Management (HALPIM), which compiles the survey - which is viewed as erratic and a somewhat unreliable guide - insisted the stagnation was a blip. However, the index dropped to 51.7 points in March from 54.8 in February.