Hungarian manufacturing business sentiment in 2013 Q2

Stagnation was measured in the Hungarian manufacturing business sentiment in the second quarter of 2013. Although it is a favourable process that those indicators that surged 3 months ago did not fell back. Thus, it is almost sure that the recession in the manufacturing industry is over. At the same time there is still no growth. The stock of new orders is decreasing according to our survey and to the official statistics, too. This affects mainly the domestic market. It is a warning sign that there are only a few companies which have confidence in emerging domestic market. At the same time the increase of exports continued although there was a slight decrease in new orders as well.

Source: Kopint-Tárki

Source: Kopint-Tárki

This caused the change in production forecasts from incensement to stagnation. It is an important development that in the rank of production barriers lack of demand (due to export) stepped back to the second place. The first barrier in that quarter the uncertainty of the economic conditions. Sales forecasts for the next 6 months worsened a lot. Decreasing stock of final products suggests that companies are delivering the existing orders only and do not form stocks relying on future possible demand.

The phenomena of low stock formation, stagnation in employment and unfavourable production forecasts suggests that there can high number companies who do not have a short term strategy for the future.

This is true for almost all sectors. In the second quarter beside the automotive industry there were only 2 other industries with low weights (manufacture of furniture and leather products) which could increase their production volume. In case of the other sectors there were decreases in production. This means that it is the automotive industry can be a growth potential for the whole economy. Nevertheless, in case of a 2 percentile decrease in the production of the automotive industry the year over year production of the Hungarian manufacturing industry would be zero. This means that the economy needs an automotive industry with more than 10% production increase which is not impossible this year but next year other sectors must grow as well.