Hungary’s automotive industry shifts to higher gear in July
Hungary’s automotive industry bounced back to an annualised 16.6% growth in July, the highest this year, up from 2.9% in the previous month, a detailed release by the Central Statistics Office (KSH) on September 14 shows.
Production of vehicle manufacturing accounted for 24% of the manufacturing sector output during the month.
The sector was challenged by the semiconductor shortage and supply chain problems for most of 2021. Growth sputtered after the breakout of war in Ukraine. Output fell 13.3% y/y in March and 7.1% in April, only to bounce back in the following month.
Output of the food, drinks and tobacco sector, the second-largest segment with a 13% weight, climbed 7.4% during the month. Output of the computer, electronics and optical equipment segment, accounting for 9% of manufacturing, rose 14.4% y/y.
The KSH confirmed the 4% headline growth in its detailed reading and 6.6% growth, according to workday-adjusted figures. Output was up 1.1% m/m and by 4.9% in the first seven months.
The data beat analysts’ expectations, as growth in Hungary’s major export markets in Europe have decelerated. Economists pointed to risks from surging energy prices. Domestic industrial producer prices expanded to an all-time record of 53% in July.
After the release of the preliminary figures, ING Bank senior analyst Peter Virovacz said the outlook of the industry remains "extraordinarily uncertain" due to the possible resurfacing of supply chain problems and the negative impact of the energy price shocks. According to an international survey by recruitment agency Manpower, a quarter of Hungarian businesses plan to cut staff in the fourth quarter.
In absolute terms, industrial sales reached HUF6 trillion (€14.9bn), 61% of which came from exports.
Since 2018, economy has carried risk of severe balance of payments crisis. For the removal of that risk, the central bank’s net in and off-balance sheet FX position should at least turn positive.
Decline of 6.5% y/y is second worst in EU.
Retail sales rose by 0.9% m/m in October, recouping the losses incurred over the previous three months.
Czech retail sales decreased by 1.4% year on year and increased by 0.6% month on month in October, in the softest monthly drop in a year and a half. The drop in sales eased compared to the 4% y/y drop in September and the 2.8% y/y drop in August.
Despite lapse in demand, firms said to retain positive attitude on 12-month outlook for activity, which remained historically elevated. Inflationary pressures continued to retreat.
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