Hungary: industry remains resilient | MENAFN.COM


(MENAFN – ING) In a context of growing problems linked to the lack of equipment, materials and labor, the industry was able to maintain a high level of production in June

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Author Peter Virovacz Newsletter

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-0.3% Industrial production (MoM, swda)

ING forecast 1.5% / Previous 3.3%

We have mixed feelings regarding the incoming industrial production data. It is an exaggeration to say that production was remarkable in June. The 0.3% month-on-month decline is far from strong but it was better than the market consensus (although lower than our forecast). And if we look at today’s German industrial data release, we see a much more drastic drop in production. In the meantime, we know that supply chains continue to experience serious disruption, so overall the Hungarian industry was quite resilient in June. Due to the extremely low base last year, annual growth stood at 22%, based on unadjusted time series.

Hungarian industry performance


Based on the release of preliminary data, expansion was observed across all sub-sectors, although some sectors showed a significant slowdown from the previous month’s performance. Unsurprisingly, the auto industry has slowed down the most, as the sector suffers more from input shortages and fragmented supply chains.

Over the past three months on average, the Hungarian industry has improved (in terms of production volume) compared to the previous quarter, by around 0.6% on the basis of seasonally adjusted data. Considering the retail sales data released earlier this week, we can say that the Hungarian economy did quite well in the second quarter of 2021. We forecast it could even repeat the 2% quarter-on-quarter growth. observed in 1Q21.

Industry production level and quarterly performance


In the short term, until the supply chain disruptions are resolved, we see sustained but moderate growth. The main reason for the expected continuous improvement is the new production capacity in the battery factories. And due to the dynamic expansion of global demand, the level of orders could continue to increase, although the hampered production capacity means that we can expect longer delivery times. Capacity utilization issues are increasingly visible, as 41% of companies now complain about an insufficient number of workers and 31% see shortages of equipment and materials as factors limiting production.

Factors limiting industrial production – Hungary

Eurostat, ING

All of this means rising input and labor costs, which could further boost producer price inflation in the coming months. Given that producers are in a better negotiating position in a context of growing demand and scarce supply, we see this becoming a problem from a consumer price perspective as well, further reinforcing already high inflationary pressures.

Industry Industrial production Hungary Capacity utilization Share

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