Industrial output fell, retail sales stagnated in January

HUNGARY - In Brief 06 Mar 2024 by Istvan Racz

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Overall, the first data on how output and demand did early this year, reported this morning, was disappointing. In seasonally and day-adjusted terms, the volume of retail sales did not change from December, despite hopes (though no outright forecasts) that the initial improvement recorded in the previous month could be continued in any little degree: Note: Fixed-base chart in volume terms, December 2010 = 100; Source: KSH The good side, however, is that the year-on-year change was +0.3% in January, the first positive number seen in this series since November 2022 (sales fell by 7.7% yoy in full-year 2023). Indeed, the following chart, showing the yoy volume changes of retail sales and the real change of after-tax wages is much more pleasant to look at for an analyst's eyes: Note: In real terms, year-on-year changes in %; Source: KSH But the real bad news was about industrial output, which fell by 1.1% mom in January in volume terms, on seasonally and day-adjusted basis, which implied a 3.7% yoy decrease, following 4.8% setback recorded in full-year 2023. Unfortunately, this fits to a well-established negative trend, which started in October 2022, under the double pressure of weakening domestic demand and the similarly weak German industrial output: Note: Fixed-base chart in volume terms, December 2010 = 100; Source: KSH At this moment, it is not known how much of the weakness in January came from domestic sources and how much from exports, but the trend for total output clearly remained unchanged. For sure, this will not make government policymakers happy, and they will most likely continue to press the MNB for the accelerated loosening of interest rate policy.