After the downturn in August, Hungarian industry continued its downward trend in September. On a monthly basis, and adjusted for seasonal and calendar effects, industrial production fell by 0.7%. There are no serious negative surprises, but the fact that industry did not improve even after the summer shutdowns is certainly telling.
Photo: Dreamstime.
The minor size of the summer correction—due to holiday-related shutdowns—may indicate the fragility of the core sectors. These sectors experience significant losses during shutdowns because of their high production volumes. The new data and the lack of a post-summer rebound only reinforce this gloomy picture.
For the year-on-year index, the calendar-adjusted figure shows a decline of 5.4% due to the impact of a higher base in the previous year. More telling, however, is the fact that the volume of industrial production is 4.8% below the average monthly output in 2021. This also means that the last time Hungarian industry had such a low level of output was during the recovery from the Covid closures.
Recent industry surveys and confidence indicators worldwide continue to point to further weakening or, at best, stagnation. Of course, the reliability of these surveys is questionable, but for the time being, the evidence does not really contradict this gloomy picture. Moreover, manufacturing activity in the euro area is at a low not seen for more than three decades without a recession in the region. Weak domestic demand, faltering external demand, high inventories and geopolitical tensions are all contributing to this.
Looking ahead, structural problems in external demand and moderate recovery expectations for next year remain. Moreover, the latest - as yet unofficial - results suggest that the Trump 2.0 era is upon us, which could be a major headache for European industry. In this respect, it is difficult to base hopes for a short- to medium-term recovery of Hungarian industry on a rebound in export demand.
More information:
ING
www.think.ing.com