Output of the automotive industry, Hungary's biggest manufacturing sector, rose 20.3% y/y in January, the Central Statistics Office (KSH) said in a second reading of data on March 14. Growth of the segment, which accounted for 25% of manufacturing output, slowed from 34.5% in the previous month.
KSH confirmed that headline industrial output inched down 0.2% y/y (chart) in January, falling for the first month in a little more than a year, albeit from a high base.
The slump in the industry came as a negative surprise. Adjusted for the number of workdays, of which there was one fewer in the base period, output dropped 3.2% compared to a 5.7% growth in December. The last time the industry suffered annual declines of this magnitude came during the pandemic lockdown.
The detailed data show the output of the electrical equipment segment, which made up 11% of manufacturing output, climbed 43.5% y/y. The computer, electronics and optical equipment segment, accounting for 11% of manufacturing, rose 10.8%.
The second-largest segment, the food, drinks and tobacco segment, accounting for 12% of manufacturing sector output, slipped 12.2%. The segment has been contracting since June 2022 on a yearly basis as food inflation surged to over 40% in recent months in Hungary, the highest among EU members. Temporary factory closures may have also played a part in the contraction, analysts opined.
On a monthly basis, output fell 5.1% y/y. Export sales edged down 0.2% and domestic sales dropped 16.5%. In absolute terms, industrial sales reached HUF6.1 trillion (€15.4bn), of which exports accounted for 57.4%.
The performance of sectors producing for export remains robust, which helped to narrow the trade gap to below €170mn in January and December, following a €1.4bn gap in November.
The volume of total new orders rose 1.0% y/y, as new export orders grew by 3.1%. The total stock of orders at the end of January was above the previous year’s level by 3.4%.
Hungary’s industry could be the engine of growth in 2023 with the new capacity expansions in the vehicle and electronics segments. Analysts augur a similar pace of growth as in 2022 when the sector grew 5.8%.