Optimism is fading again the manufacturing industry

The current state of the Hungarian manufacturing industry is odd. On one hand the sentiment indicators reflect good mood – all indices based on the subjective assessment of the companies are on high levels. On the other hand other indicators that are relying on more objective factors are in declining. Growth of stock of orders has been stopped on the third quarter and affects both domestic and export stock of orders. That pulls the production forecasts down: it declined from 70 points to 62 points. This would not be a problem by itself, but it seems that firms formated large volume of inventories during the summer. Thanks to that stock of final goods increased from record low to record high in 3 months (low stock of final goods is the favourable). Majority of the companies possess high volume of inventories of final goods, which also pull the production down. Due to that the confidence indicator is in the negative domain (46 points) which is a significant chance if compared to the last quarter’s positive record. This is not set into a proper perspective if the sentiment indicators is considered; it’s values has been increased to 67 points (from 64). It’s not a historical record but close to it.
All in all the current perspectives are negative but most probably only temporary. The already implemented growth incentive measurements of the government will have positive effects on the manufacturing industry, thus indices may begin to increase from spring.