Hungary’s automotive industry becomes less of a drag on industrial growth in November

Hungary’s automotive industry becomes less of a drag on industrial growth in November
By bne IntelliNews January 13, 2022

The output of automotive manufacturing, the biggest segment of Hungary's industrial sector, fell 15.1% y/y in November, declining at a slower pace than in the previous three months, a detailed reading of data released by the Central Statistics Office (KSH) on January 12 shows.

Hit by production shutdowns and scale-backs because of the global semiconductor shortage, the automotive segment, which accounts for close to one-quarter of the manufacturing sector, has weighed on headline industrial output, which plunged 30% in October.

The KSH confirmed the preliminary 2.6% growth of the industry in November and the 2.1% expansion when adjusted to working days. The figures were a positive surprise as supply constraints remain. On a monthly basis, output climbed a seasonally- and workday-adjusted 2.9%. For the period January-November, output increased 9.9% y/y.

The detailed November data show the output of the computer, electronics and optical equipment segment – accounting for 12% of manufacturing – edged down 2.1% y/y in November, also impacted by the chip shortage, KSH said. Output of the food, drinks and tobacco segment – which makes up 11% of manufacturing sector output – increased 17.4%.

While Hungary's two most important manufacturing segments - automotive and computer, electronics and optical equipment - are still struggling with shortages, their poor performance was offset by other branches with lower weight, ING Bank said.

Manufacturing sector sales slipped 0.2% in November as domestic sales rose 11.3%, but export sales dropped 4.2%. Exports accounted for 71% of manufacturing sector sales.

Order stock in segments of the manufacturing sector tracked by KSH was up 11.7% at the end of November from 12 months earlier. New order volume fell 2.2% as new domestic orders rose 7.3%, but new export orders declined 3.7%.

Hungary's automotive industry has a historically high order backlog, but it cannot fully meet these orders due to the shortage of semiconductors, the Ministry of Innovation and Technology said.  Analysts expect the chip shortage to ease in H2, which could trigger a sharp rebound in output.

Full-year industrial output could grow 10% in 2022 and by 5-6% next year, according to analysts.