Following a turn of the year slowdown, Hungary’s industry sector continued its return to form in May in unadjusted annual terms, data from statistics office KSH showed on July 7. However, in other terms, the recovery looks less stable.
Unadjusted industrial production grew 9.2% y/y in the fifth month of the year, following an 5.3% y/y increase in April. While the extended turn of the year slowdown in industrial production – mainly due to a drop in the auto sector – contributed to feeble GDP growth in Q1, a recovery in the industrial sector should help improve the economic outlook for the second quarter.
However, other data was less impressive. Production decreased yet again on a monthly basis. While the 0.7% fall followed 5.4% rise in April, that was preceded by five straight months of decline.
On a working-day adjusted basis, y/y growth showed a less impressive 4.2% gain, compared to 5.3% y/y in April. The two-year average for annual adjusted growth is around 7%, and growth peaked at 12.7% in October. However, industrial production increased just 0.3% y/y in Q1 2016. Overall then, the May data is unlikely to end concern over long-term growth in the sector.
Indeed, the growth in May did not reflect improvement in the auto sector, but rather the good performance of other segments of manufacturing, KSH said. The stats office will issue a detailed estimate on July 13.
Carmaking drove impressive growth in industrial output last year. However, it is becoming clearer that the potential of the auto segment to unbalance the entire industrial sector is now an issue for Budapest.