Hungary Industrial Output March 2008

Hungary's industrial output rose by 1.9% year on year in March, according to unadjusted data and was up by 4.3% yr/yr, according to figures adjusted for working days, the Central Statistics Office (KSH) reported on Thursday. The adjusted growth data has not been so weak since February 2005. Industrial output grew by 6.9% yr/yr in the January-March period.



Output decreased by 2.6% month on month (vs. +2.3% in Feb), according to figures adjusted seasonally and by working days.

The KSH is scheduled to release detailed data on the industry on 15 May.

Bartosz Pawlowski, Toronto Dominion Bank, London

“March industrial output increased by 4.3%yoy (which means 1.9%yoy in unadjusted terms). This is the slowest pace of production growth since March 2005. Although a part of the weakness in March data can be explained by a much better February result, it seems that weaker exports are taking their toll on the Hungarian output."

“Industrial production has been trending downwards since early 2007 adding concerns that the economic growth will continue to disappoint. This is particularly the case given the ongoing weakness in consumer spending, as evidenced by negative growth of retail sales."

Gábor Ambrus, 4Cast, London

“Prelim Hungarian industrial output came in at 4.3% y/y, slightly above our 3.0% y/y forecast and a good margin below mkts 7.8% consensus. Unadjusted growth was even weaker at 1.9% y/y from 13.2% y/y last month. M/M swda growth estimated at a shocking -2.6%, though one has to note that last month's reading was distorted by the leap year effect and statistical methods for correcting for this distortion are not robust enough, given the general data volatility and lack of observations."

“We maintain that trend growth for the Hungarian industry should be around 5% this year, Feb overshot that level, Mar brought some correction on the downside. The same volatility was seen in the case of the Polish data for Feb/Mar, suggesting statistical effects are largely to be blamed."

Eszter Gárgyán, Citibank, Budapest

“We expect industrial exports to slow in the second half of this year as activity in Hungary's main export partners in the eurozone decelerates, as demonstrated by the drop in the latest business indicators and retail sales data in the eurozone."

“Therefore, we expect decelerating industrial performance to limit the improvement in the trade balance and slow the economic recovery in the second half of this year, thus GDP growth is likely to remain below 2% in 2008."

“As the MPC noted in the April statement, the disinflationary effects of the negative output gap on a wide range of goods and services has not been confirmed by the inflation data so far. Therefore, our view is that the MPC will maintain its hawkish stance despite the disappointing growth outlook and continue hiking rates if the inflation outlook is above the 3% target on a 5-8 quarter policy horizon."

“We expect the NBH's May Inflation Report to forecast that the headline inflation will only decline to the 3% target by the end of the 3Q09-2Q10 target horizon with significant upside risks."