Protracted weakness in industry

160507_Ipar_1_ENAccording to the preliminary data, industrial production fell in March by 4.6% against the same month of 2015. Even the working day adjusted year-on-year growth rate was negative (-2.4%), which is unprecedented since May 2013. Instead of the expected upturn, the seasonally and calendar adjusted production volume continued to decline for the fifth consecutive month in March. In the first quarter, industrial production virtually stagnated on an annual basis.

160507_Ipar_2_ENThis is worrying since it cannot be explained away anymore as a glitch from the year-end stoppages in the automotive industry. Now a substantial tapering of growth (in the automotive sector, for example) seems more plausible than previously, and the stagnation of German manufacturing export sales, already observed for almost a year,  may be making a palpable dent on Hungarian industrial growth. Although we expect the return of growth in the coming months, the slowdown is likely to be more pronounced than previously expected – our projection of an annual average growth of 5% seems to be increasingly optiomistic now.