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Mass layoffs in part to blame for big drop in December output - extended

Hungary’s industrial output declined a preliminary 1.1% in 2008, data published by the Central Statistics Office (KSH) on Friday show.Layoffs at several big manufacturers were partly to blame for a big drop in industrial output in December, analysts told MTI.  

Hungary’s workday-adjusted industrial output fell a sharp 23.3% in December from the same month a year earlier, the Central Statistics Office (KSH) said early Friday. Industrial output has dropped every month since June as Hungary’s export-driven economy suffers the effect of slowdown on its biggest markets in Western Europe.

Erste Bank’s Orsolya Nyeste said the 8% decline in exports in November augured the weak December industrial output data. The outlook for 2009 is no better, she said, putting the contraction in output at 3.5-4.0%.

MKB Bank’s chief analyst Zsolt Kondrat said industrial output could fall as much as 15% in 2009.

Both analysts noted that the December figures were skewed because of cutbacks in production and layoffs at several big manufacturers during the month. More companies scaled back production and laid off staff in January too, which could cause a bigger than expected drop in output again in January, they said.

Kondrat said the drop in January output could reach 20%. Hungary’s output is tied to German industrial orders, which fell 6% in November and 6.9% in December, in a month-on-month comparison, he added. Kondrat forecast Hungary’s economy would contract 4.5-5.0% in 2009. He estimated GDP growth was a slim 0.5% in 2008.

Ms Nyeste said she would stand by her projection for an economic contraction of 2.7% in 2009, in spite of the big fall in December output. The economy likely contracted 1% in Q4 and 0.7-0.8% for the full year in 2008, she added. (MTI-Econews)