Continued weak demand and output figures in August

HUNGARY - In Brief 08 Oct 2023 by Istvan Racz

---

Retail sales fell by 7.3% yoy in August, after an 8.1% yoy drop in July and an 11% yoy decrease in Q2. In relative terms, this sounds like a bit of improvement, but it is still very far from anything that would directly suggest that the economy was already growing in this period: Note: In volume terms, yoy changes in percent; Source: KSH For sure, last year's temporarily existing high base data distorted the picture. But in August alone, retail trade still fell by 0.5%, after -0.2% in July and -0.4% in Q2. This suggests that consumer demand has not even stabilised fully yet, at least not until August: Note: In volume terms, December 2010=100; Source: KSH It points to the same direction that total guest nights spent in local hotels fell by 0.1% yoy in August, within which the guest nights attributed to domestic tourists fell by 6% yoy, and only the growing number of foreign visitors saved the sector from a deeper plunge. True, there are signs from foreign statistics that Hungarian tourists went abroad for summer holidays in growing numbers this year, presumably as domestic holidays have become quite expensive and the forint was quite strong in summer. But in addition, industrial output decreased by 6% yoy in August, after -2.7% yoy in July and -5.2% yoy in Q2. At this moment, it is still not known how industrial sales growth was split between domestic sales and exports in August. But in July, domestic sales growth was a very weak -11% yoy and exports also fell by 2.2% yoy. By the way, total sales fell by 5.9% yoy in July, i.e. they were very substantially weaker than production.     Note: Yoy changes in percent, output in volume terms; Source: KSH In August alone, outpu...