Hungary: Industry up 14.3% y/y in February, beating expectations

April 4th, 2011 | by linda smit |

The outcome exceeds our 12.0% forecast and the market’s 11.7% expectation as well

Preliminary industrial output figures surprised to the upside by showing a 14.3% y/y growth, beating our forecast of 12.0% y/y and also the market’s expectation of 11.7%. The working day-adjusted y/y data equals the unadjusted figure. In January, the unadjusted growth amounted to 13.4%, while the adjusted figure was at 10.7%. The monthly index showed a 0.9% growth in February. The first two months of 2011 brought a 13.8% y/y increase. Detailed data are not yet available; the Central Statistical Office (CSO) will disclose them 14 April. Immediate comments from the CSO pinpointed that exports was the main driver of growth, but domestic sales also showed signs of pickup.

Assessment:

The data is positive and shows that the disappointing December data was a one-off. Export related industry continues to be the main driver of growth, as expected, namely: electronic equipment manufacturing and machinery and vehicle manufacturing. The German economy is still performing nicely and this is also reflected in Hungary’s industrial performance. (German industrial orders data surprised to the upside yesterday). Detailed data is not yet available, but according to the CSO’s comments domestic sales showed signs of pickup, which is also good news. In the recent months, domestic sales showed sluggish performance while export sales soared, so an increase of the contribution from domestic sales would be a good sign (detailed data is expected next week). Later this year, slowdown of growth dynamics is expected, and the average yearly growth may return to single-digit territory in 2011. However, we perceive risks to our current forecast of 7% industrial production growth for this year due to the better than expected performance in the first two months of this year.

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