HU: Industry surprised to the dowside in November

Volume of industry dropped by 2.9% y/y in November, according to the working day adjusted statistics. The actual figure came as a negative surprise, as it was much weaker than our estimate. Despite the favorable base effect, the yearly figure hardly improved (in October, the yearly decline was 3.1% (wda)). It was a huge disappointment that following a monthly increase of 2% seen in October, the performance plummeted again, by 1.6% m/m (swda). In January-November 2024, the production was 3.9% lower than in the same period of 2023.

More details on the structure of the output will be released on January 14. According to the CSOs usual short comment, production volume fell in November in the great majority of the manufacturing subsections. Output grew only in three subsections, at the highest rate in the manufacture of coke, and refined petroleum products.

Last Octobers monthly increase in the performance proved temporary and short-term prospects of the sector are rather unfavorable, as well, given still weak economic state of Hungarys main export markets. Additionally, the process of electromobility has also slowed down, and for the time being, there are no signs of an improvement in the coming months. In the medium term, big capacity expansions are to enter the production mainly in the vehicle industry and in the field of battery productionand this may result in a recovery of output. However, the lack of external demand remains the most relevant risk possibly causing further delays in the start-up of production. Given the current poor situation, the positive impacts of the above capacity expansions can mainly occur from 2H 2025 or rather from 2026.