HU: Industry decreased by 8.0 % y/y in February

Unpleasant surprise came in this morning: the volume of industry dropped by 8.0% y/y in February, according to the working day-adjusted statistics. The actual figure was relevantly weaker than our estimate and the Bloomberg consensus. On monthly level, the output fell by 1.3% (swda). In the first two months of the year industrial production was 6.4% lower than in the same period of 2024.

More details on the figures will be released on April 11th. According to the CSOs usual short comment, production volume decreased in every manufacturing subsection compared to the same month of the previous year. Out of the subsections having the largest weight a significant fall was observed in the manufacture of transport equipment, as well as in the manufacture of electrical equipment, while the manufacture of computer, electronic and optical products and the manufacture of food products, beverages and tobacco products declined to a lesser degree.

The outlook remains hazy. A positive change in external demand is needed to exploit the automotive (BMW, BYD) and battery investments (CATL) planned to enter production at end of 2025. The cyclical rebound of the German economy could result in some upswing, however the storm caused by the looming trade war by US could totally clear the improvement. These factors may further delay a revival of the main export markets and, uncertainty remains extremely high and consequently postpone an improvement in industrial performance. Positive impacts of the huge capacity expansions may rather appear from 2026 however further escalation of trade war could curb these prospects.