Slovakia’s workday-adjusted industrial production surprisingly fell 0.5% in August, reversing an 11.9% increase in the previous month, the statistics office reported on October 9. It was the first drop in industrial output this year, and appears to have analysts befuddled.
The shock drop was driven by a 9.1% decline in the mining and quarrying sector and a 4.3% reversal in the utilities sector. Growth in the manufacturing sector slowed to 0.3% from 14.1% in the previous month.
The decline is at odds not only with the trend of the last nine months, but also longer term expectations that industrial production should continue to expand. While the recent VW scandal could put planned investments by the German carmaker in Slovakia at risk, and hit production at current plants, that didn't blow up until September.
That leaves the figures a bit of a mystery. Analysts struggle to see a clear driver behind the sharp drop in output in August.
"The rapid u-turn of industrial production growth may be linked to different holiday schedules for major industrial plants in Slovakia, as well as statistical noise typical over the summer months," Slovenska sporitelna analyst Katarina Muchova suggests to bne Intellinews.
Others suspect there may be some issue with the figures themselves. “July’s result was the strongest since the end of 2013; the August dynamics were the weakest since the end of 2014," notes head of CEE Research Sberbank Europe, Vladimir Vano. Such "significant fluctuations between two consecutive months," suggest there may be some "methodological distortions," he suggests.
On a seasonally adjusted monthly basis, industrial output decreased 1.6%, after rising 0.8% in July. In the first eight months of the year, industrial production rose 4.9 % y/y.
The highest annual growth in August in the manufacturing sector, of 58.4%, was registered in the production of pharmaceuticals. Output in the vital carmaking sector declined 1.2%, reversing a 27.6% increase in July. Slovakia is home to three major car assembly plants run by Volkswagen, South Korea's Kia Motors and France's PSA Peugeot Citroen.
The fall in electronics production, also a driving force of Slovak industry, slowed to 12.5% from a 13.6% drop the previous month. Slovakia hosts plants run by South Korea's Samsung and Taiwan's Foxconn.
|y/y change||August 2015||July 2015||August2014||Jan-Aug 2015||2014|
|--food, beverages and tobacco||8.4%||0.1%||-11.1%||7.4%||-1.5%|
|--textiles, apparel, leather and related products||4.2%||3.3%||-23.8%||2.9%||-11.7%|
|--wood and paper products, printing||9.4%||3.1%||-10.2%||4.0%||0.0%|
|--coke and refined petroleum products||10.4%||42.0%||-8.8%||30.2%||-9.4%|
|--chemicals and chemical products||14.8%||41.3%||-20.5%||5.8%||-28.1%|
|--pharmaceuticals, medicinal chemical and botanical products||58.4%||-14.6%||-49.5%||4.8%||-11.4%|
|--rubber, plastics and other non-metallic mineral products||5.3%||8.0%||1.3%||3.8%||4.5%|
|--basic and fabricated metal products, except machinery and equipment||-5.3%||14.6%||21.2%||4.9%||13.0%|
|--computers, electronics and optics||-12.5%||-13.6%||0.9%||-11.7%||1.7%|
|--machinery and equipment||15.0%||8.4%||-4.6%||6.8%||5.4%|
|--other manufacturing, repair and installation of machinery and equipment||2.2%||9.3%||15.0%||9.1%||14.6%|
|Electricity, gas, steam and air conditioning supply||-4.3%||-2.4%||5.2%||4.0%||-4.3%|
|Source: Statistical Office of the Slovak Republic|
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