HU: Major branches still well below the capacities
The working day adjusted figure came in at -6.4% y/y. The unadjusted figure was more favorable: it declined by 1.3 y/y in July, due to higher number of working days than a year ago. On a monthly level the output stagnated compared to the sixth month. In the first seven months of the year production was 3.0% lower than in the same period of 2023.
Further details on the statistic will only be available in a week. According to the statistical offices usual brief comment, Out of the four subsections having the largest weight production volume lessened in the manufacture of transport equipment, the manufacture of electrical equipment, as well as the manufacture of computer, electronic and optical products, at the same time it grew in the manufacture of food products, beverages and tobacco products. That indicates clearly that flagships of the domestic industry vehicle and battery production - have continued to operate well below capacity, due to the weak external demand.
The short-term outlook remains bleak, as Hungarys main export markets show no major recovery signs. On the bright side, Germany has announced a new support program for electric car purchases. We dont expect a rapid recovery in the second half of the year, and overall performance may stay subdued. Medium-term prospects look better, with significant manufacturing investments in battery production and the automotive sector (CATL, BMW, BYD, Mercedes) promising outcomes. Investments worth over EUR 10 billion are expected to start in 2025, but their success hinges on a substantial improvement in the European economy.