KBC Market Research Desk
KBC Bank
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Hard data from the Hungarian industry stay strong
Just released Hungarian macro figures have showed that the industrial production accelerated from 11.3% Y/Y in June to 12.3% Y/Y in July. The figure is well above the consensus expectation of 9.7% Y/Y increase. The figure is strong especially that the base in last year was also relatively high. The working day adjusted industrial growth was also 12.3% Y/Y, while the seasonally and working day adjusted one reflected only marginal slowdown of increase from 1.8% MoM in June to 1.6% M/M in July.
The expectations for a slowdown were not only because of the high base, but more because of the European slowdown. The Hungarian industrial production has quite high correlation with German IFO index, which started to decrease already in April, but this deterioration has been not reflected in Hungarian industrial figure yet. The main reason behind it is that the domestic sales within industrial production started to accelerate in April. Although Statistical Office will published detailed figure of July industrial production next Friday, most likely the domestic sales may accelerated further, but also the new capacities of vehicles production and the low base of electronic devices productions might boost the growth. The further drop of IFO index and the slowing European conjuncture may pull back Hungarian as well, and Industrial production may slow during autumn, the full year average growth can be close to 10% Y/Y in 2014.
The strong figure had no effect on EUR/HUF and it moves with its regional peers. After the surprise decision made by the ECB yesterday EUR/HUF moved to 312, which was the bottom of the strengthening in August as well and now the 50-days moving average also stays at that level. Now the market may wait on news about Russian – Ukraine conflict and on the sanction EU introduces against Russia. If positive news arrives, the next resistance level is between 309 and 310, while on the weak side 315 and 317 are important levels.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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