KBC Market Research Desk
KBC Bank
Although the latest PMI figures signalled optimism among managers in manufacturing sector in the Czech Republic as well as in Hungary, August data regarding industrial output have not supported these positive expectations.
In Hungary, after three months of a double-digit annual industrial growth, the slowdown in August was evident. According to the Hungarian statistical office, industrial output rose by 0.5% compared to the same period of the previous year, which is far below previous readings as well as market consensus of 11% annual rise. After working-days adjustment, the industry grew by 2.9% Y/Y. The results of the Czech industrial production surprised negatively as well. It fell in comparison to the same period of the previous year by 5.2%. As in Hungary, the decline was partly driven by lower number of working days; nevertheless even working-day adjusted number of minus 3.6% Y/Y remained below the market consensus as well as our estimations.
Both Czech and Hungarian industrial slowdowns likely have similar causes. The biggest drop was recorded in a car industry, which traditionally experiences fluctuations due to company vacations. In The Czech Republic, the shift of holidays supported industrial growth in July and in contrast contributed to the slowdown in August. In Hungary, a big carmaker even stopped production for an entire month in August, which is unusual.
In addition, both economies are interconnected with German economy and recent data showed that German industry fell significantly in August as well. In this context, it would have been quite a surprise if deterioration in Germany had not been at least partly reflected in the regional figures.
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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