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Automotive sector holds back August industrial output growth

Automotive

In August 2018, the volume of industrial output grew 1.5% year-on-year, according to a first estimate of data from the Central Statistical Office (KSH). Output grew dynamically in electronics, but fell at a pace similar to July in the automotive sector.

Based on working day-adjusted data, production rose 4.5% in August 2018, compared to the same month of the previous year. According to seasonally and working day-adjusted indices – August output was 3.8% above the level of the previous month.

In the first eight months of this year, industrial production was 3.6% higher compared to January-August 2017.

Output growth in August compensated for the weak performance in the previous two months, ING Bankʼs lead analyst Péter Virovácz told state news agency MTI. The automotive sector held back overall performance, he noted, with car maker Audiʼs output reduced as the launch of electric engine manufacturing was unable to offset the effect of missing permits for the Volkswagen Group (of which Audi is a member).

Gergely Suppan of TakarékBank agreed, adding that output could gradually pick up in the months ahead as the affected models and engines receive permits. A weak base and the launch of production at new manufacturing capacities would also help output, he noted, while observing that domestic demand is strengthening and European and German indices forecast continued growth.

TakarékBank projects industrial output growth to slow to a calendar-adjusted 4.5% this year, down from 5.3% in 2017.

Erste Bank senior analyst Orsolya Nyeste said that adjusted 12-month and monthly output growth were much better than expected. She noted that due to changes in regulations the automotive sector could contribute less than earlier thought to GDP growth this year. Market services and the construction sector are likely to contribute more, however, so the economy could still expand at a rate of 4.3% in 2018, she added.

A second, more detailed estimate of industrial output data for August 2018 and the year to date will be published this Friday, October 12.

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