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Hungary industrial output falls further - extended

Hungary’s industrial output declined 22.9% in January 2009 after a massive 19.2% decline in the previous month, a second reading of data published by the KSH on Tuesday shows. Analyst say fall in industrial orders is worrying.

In January, industrial output fell a workday-adjusted 21.0% after contracting 23.4% yr/yr in December 2008. The KSH reported the same 21% workday-adjusted decrease in a preliminary report for January on March 6.

Compared to December, output rose 2.5% according to workday- and seasonally-adjusted figures.

Industrial export sales dropped 29.2% and domestic sales were down 5.0% yr/yr in January. Workday-adjusted figures show slightly lower declines of 27.3% in exports and 3.3% in domestic sales.

New orders were down 32.4% yr/yr in January, with export orders falling 32.2% and domestic orders contracting 33.4%. Total orders stood 17.7% below the level recorded a year earlier.

Export sales of manufactured goods fell 30.3% in January, far more sharply than the 22.1% decrease registered in December and the slight 0.3% increase for the whole of last year.

Export in electric equipment corrected sharply to a 16.5% decline in January after a significant 16.4% hike in December.

Machinery exports declined 10.0% in January after a 1.6% increase in December and vehicle exports declined a disappointing 39.2% in January, accelerating from a 32.1% contraction in December.

Food exports dropped at a 1.7% rate in January after a 5.9% rise in December.

Domestic sales of capital goods fell 34.5% yr/yr in January. Sales of consumer goods were down 22.1% as the result of a 14.0% decrease in non-durable consumer goods and 28.1% decline in sales of durable consumer goods, detailed KSH figures show.


Analysts polled by MTI on Tuesday said that the sharp decrease in industrial orders is a cause for worry, forecasting a double-digit decline in industrial output for the coming months and a 5% fall in GDP this year.

MKB Bank’s chief analyst Zsolt Kondrat said the slight increase in industrial output in January compared to December was due to increased output from smaller industries due to the gas dispute.

As a result of this, oil and gas extraction services jumped 22.3% yr/yr in January 2008. However, this rise is unlikely to endure, particularly considering the significant fall in orders.

Kondrat said Hungary’s declining exports are troubling, adding that he expects no short-term improvement in this domain. Kondrat predicted that industrial output would continue to drop at a similar pace over the next months, though there may be an upturn in H2 2009 if the global economy begins to recover. Kondrat forecast a 18% decrease in industrial output and a 5.2% decline in GDP this year.

K+H Bank’s György Barcza projected a 20-25% decline in industrial output for the whole year despite January’s monthly rise. Barcza added that compared to more developed countries, where industrial output has declined to 2004 levels, Hungary’s industrial output declined to a level recorded two or three years ago.

Barcza predicted that Hungary’s GDP would drop 4-5% and industrial output would decline 20%, adding that the more pessimistic forecasts seem to be more and more realistic. (MTI-Econews)