Slower growth in Hungary’s vehicle sector drags down February industrial production

Slower growth in Hungary’s vehicle sector drags down February industrial production
/ bne IntelliNews
By Tamas Csonka in Budapest April 14, 2023

Detailed data of Hungary’s industrial output shows the biggest sectors expanding in February but segments with lower weight continuing to struggle.

The Central Statistics Office (KSH) confirmed that headline industrial output fell for the second straight month in February, down 4.6% year-on-year, after edging down 0.2% in January. Output inched up a seasonally- and workday-adjusted 0.3%, and in the first two months it fell 2.4% y/y.

The figures confirm that Hungary's economy will remain in recession in Q1 on a quarterly basis, extending two months of contraction.

Output of the automotive industry, Hungary's biggest manufacturing sector, rose 7.5% y/y in February. Growth of the segment, which accounted for 27% of manufacturing output, slowed from 20.3% in the previous month. Growth in the electrical equipment segment, which made up 11% of manufacturing output, climbed 27.9% y/y, but output of the computer, electronics and optical equipment segment, accounting for 10% of manufacturing, fell 8.9%.

Output of the food, drinks and tobacco segment, which made up over 11% of manufacturing sector output, slipped 13.6%. Export sales edged 2.0% lower and domestic sales dropped 12.2%.

Industrial sales reached HUF6.1 trillion (€16.2bn), of which 58% came from exports.

The slowdown in industrial production since Q4 was mainly due to a slowdown or halt in production in energy-intensive sectors as prices rose. Weaker domestic demand for food staff has also left its mark on the food industry.

The volume of total new orders in manufacturing was 5.4% lower compared to February 2022, (-10.3% for domestic orders and -4.5% for export orders), while the total stock of orders at the end of February was above the previous year’s level by 2.1%.

Takarekbank expects industrial growth to decelerate to 2.5-3% this year from 5.8% in 2022.