Hungary’s industrial production fell 2.6% y/y in July (chart), according to both adjusted and unadjusted data, as growth in the country's automotive industry slowed. Industrial production fell for the seventh straight month on an annual basis. It fell 3.8% in the previous month.
Hungary’s industry is struggling from the weak performance of sectors producing for the domestic market, constrained by high energy prices and falling demand. Sectors that have strong exposure to foreign markets are not able to compensate for these declines. The economic slowdown in Europe and namely Germany poses huge risks for Hungary’s export-dependent manufacturing sector.
In a month-on-month comparison, output rose a seasonally- and workday-adjusted 2.8%. For the period January-July, output dropped 4.5% year-on-year. Even with a rebound in the second half, the sector is expected to contribute negatively to GDP this year, after a 6.1% growth last year.
Detailed data showed output of the automotive industry, Hungary's biggest manufacturing sector with a 28% weight in output, rose 14.4% y/y in July, slowing from a 19.1% increase in the previous month.
Output of the electrical equipment segment, which made up 11% of manufacturing output, climbed 9.8%. Output of the computer, electronics and optical equipment segment, accounting for 9% of manufacturing, fell 5.0%. Output of the food, drinks and tobacco segment, which made up 13% of manufacturing sector output, slipped 9.3%.
Industrial sales fell 5.9% in July as export sales slipped 2.2% and domestic sales dropped 11.0%.
In absolute terms, industrial sales reached HUF5.27 trillion (€13.7bn). Export sales accounted for 60% of the total.
The volume of total new orders in the industry was 4.5% lower compared to July 2022 as new domestic orders dropped by 1.4%, and new export orders fell by 5%.
The total stock of orders at the end of July was above the previous year’s level by 6.8%.