Slovak industrial production retreated in March, the statistics office reported on May 12. Falling 1.4% y/y on an adjusted basis, activity dropped significantly compared to the 7.4% growth in the second month of the year. It was the first drop in output since August.
The weak performance in March mainly stemmed from an 8.4% drop in mining and quarrying and a 2% fall in manufacturing. After seasonal adjustment, industrial production decreased 2.3% compared with February.
However, unlike in Hungary, where industry has also seen a poor start to the year, it was not Slovakia's key carmaking sector behind the struggles. While manufacturing of rubber and plastics, food and beverages, and computers and electronics all suffered double-digit drops in output, the manufacture of transport equipment rose in March by 7.4%.
Slovak industrial output has been volatile in recent months but is expected to bounce back in the medium term, especially supported by a large new investment from Jaguar Land Rover (JLR). The recovery in Germany, the country’s main export market, remains a key factor behind the positive trend.
In the first quarter of 2016, industrial production grew 2.4% in annual terms. Manufacturing rose by 2.6%, while utilities grew 2%. Production in mining and quarrying dropped by 8.6%.
The most significant rise in annual terms was recorded in manufacture of transport equipment, which grew by 9.9%, the statistics office said. With large investments in the automotive industry scheduled over 2016 to 2018, foreign direct investment looks primed to help drive overall investment growth and output.
In March, construction production after seasonal adjustment decreased by 4.8%, compared with the previous month. However, on average, in the first quarter output increased by 10.4% in annual terms.