Hungary’s already robust retail sales growth for April revised upwards

Hungary’s already robust retail sales growth for April revised upwards
By bne IntelliNews June 24, 2016

Hungary’s calendar-adjusted retail sales growth in April accelerated more than previously estimated, according to a report from statistics office KSH released on June 24. The indicator rose 6.7% y/y in April, while the initial estimate on June 3 earmarked growth at 6.4%.  

The reading shows an extended recovery in retail turnover following a sharp slowdown in January. April sales were well above the 4.2% growth recorded in the previous month and even surpassed the robust 6.6% expansion in February. Retail sales in Hungary have been increasing since July 2013 on the back of a tightening labour market and resultant consumer confidence, and remain a vital driver for the economy.

At the same time, the remarkable slowdown of GDP in Q1, which recorded a 0.8% q/q contraction illustrates that consumption was not strong enough to fully counterbalance troughs in the industrial and construction sector.

The unadjusted retail sales figure shows milder growth at 5% in April, compared to 5.5% in March. In specialized and non-specialized food shops, the volume of sales adjusted for calendar effects rose by 3.9%. Turnover increased 11.3% in non-food retail trade and 3.5% in automotive fuel retailing.

Retail sales are being closely watched across Central Europe due to consumption's major role in economic growth over the medium term. Analysts in Hungary forecast that rising employment, income tax reduction, net real wage growth - which came at 7.5% y/y in the first four months of the year - and low inflation will continue to provide a strong base for household consumption in Hungary this year.