Retail sales grow across the CEE, Slovak industry takes a hit

As of yesterday, the retail and industry data for the first month of the year have been finalized. In terms of merchandise sales, January saw annual increases across all countries in the CEE region. Poland reported the strongest performance with a 4.8% increase, a significant upside surprise. Hungary followed closely with unexpectedly high growth (4.7%) as well, while Croatia reported a 4.3% increase, confirming a moderation trend after strong retail performance in 2024. The industrial sector showed more varied results. Croatia achieved the highest growth at 7.5% y/y, while the industrial sectors in Czechia, Poland, Hungary, and Slovakia contracted on an annual basis. Slovakia experienced the most challenging January among its CEE peers, with both retail and industry performing the worst in the region. Retail sales in Slovakia grew by only 0.8% y/y, primarily due to higher VAT and weaker nominal wage growth in the last quarter of 2024. Partial impact may have also come from household stockpiling, as price increases were anticipated. The industrial sector also faced difficulties, with the consensus forecast of +1.7% missing by a large margin as the final figure came in at -5.2%. Despite higher vehicle manufacturing, industrial production failed to stabilize, significantly impacted by sharp declines in metal production, energy-related production, and the manufacture of machinery and equipment.