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Slowing decline in May industrial output

A slowing decline in Hungary's industrial output in May was in line with expectations and augurs further improvement for the rest of the year, analysts told MTI on Tuesday.

Hungary's industrial output fell 22.1% in May, according to both, calendar year-adjusted and unadjusted figures, the Central Statistics Office (KSH) said in the morning. The drop slowed from a 25.3% decline in April

Unadjusted industrial output has fallen every month since October, and workday-adjusted output has fallen every month since July.

The May decline slowed in part because of lower growth in the base period, as the month-on-month 2.1% growth in April turned in to a 1.6% fall in May 2008. Unadjusted industrial output growth slowed to 4.0% in May of 2008 from 12.6% in April. Adjusted twelve-month growth dropped from 7.3% in April of the same year to 6.5% in May.

In a month-on-month comparison, workday- and seasonally-adjusted industrial output rose 2.6% in May in a turnaround after a 5.1% decline in April.

In January-May, industrial output fell 23.3% from the same period a year earlier.

Magyar Takarékszövetkezeti Bank's Gergely Suppán said Hungary's PMI as well as other measures of business confidence had pointed to the improved industrial output data. The decline in output is likely to slow in coming months, too, reaching around 20% in the second half of the year, he added.

The May data reflects the positive effect on Hungary's automotive industry of incentives to purchase new vehicles introduced by several European governments, Suppán said. In other sectors, companies are still “getting rid” of their stocks, he added.

In a month-on-month comparison, growth can already be seen, Suppán noted. Twelve-month output will turn positive no earlier than December, and then only because of a weak base, he added.

Raiffeisen Bank's Zoltán Török also said the May industrial output data was in line with expectations. The decline in June could slow under 20%, and reach the single digits by the end of the year, he said. Growth will probably not return until the second half of 2010, he added. (MTI-ECONEWS)