HU: Another disappointing industrial output data

Volume of industry dropped by 4.1% y/y in August, according to the working day adjusted figure, somewhat weaker than both our estimate of -3.7% y/y and the Bloomberg consensus of -2.8% y/y. Industrial performance plummeted by -9.5 y/y, as there were two less workdays in August 2024 than in August 2023. It was another disappointment that industrial output dropped by 0.5% (swda) on a monthly comparison. In the first eight months of the year production was 3.8% lower than in the same period of 2023.

More details on the structure of the output will be released on October 15. According to the CSOs usual short comment, production volume fell in the great majority of the manufacturing subsections. Output grew only in three subsections, at the highest rate in the manufacture of chemicals and chemical products.

The output of domestic industry has been on a slow declining path for two years now. For the time being, we cannot see any factor that would represent an upward risk for the rest of the year, due to permanent lack of external demand. The announced plant closures and large-scale downsizing of production in case of German manufacturers could have further negative impacts on the domestic production, as well.

In the medium term, earlier built capacities could enter the production - mainly in the vehicle industry and in the field of EV battery production - that may result in a meaningful recovery of output. However, uncertainties have remained, as in the lack of external demand, the start-up of production would further be delayed. Industry is set to be a negative contributor to GDP in 2024, as well, similarly to the last year.