June retail sales data is a proof of gradual economic recovery

HUNGARY - In Brief 05 Aug 2020 by Istvan Racz

---

Retail sales grew by 3.7% mom in June on seasonally adjusted basis, implying a -0.5% yoy number. The latter was much better, of course, than the -3.5% yoy figure seen in May and the -9.5% low point of the year-on-year curve back in April. This kind of recovery seems to have followed the general EU trend, although so far the speed of the upswing has been moderately lower in Hungary than the European average.Apart from the fact that the consumer goods market is improving, we do not want to create the impression that the new retail sales figure is particularly impressive. The yoy drop was 4.3% in Q2, which is to be compared with the 3% yoy drop that we expect for total household consumption, and the latter would still go together with -12% yoy for the quarter's GDP in our view. Sure enough, this comparison is by no means a simple task, as the consumption of services is largely missing from retail sales, and during the Covid-19 crisis, people have been buying much less of some services (travel, cultural, catering, etc.) but much more of others (mainly telecommunications and IT). All in all, we do not expect the Q2 household consumption figure to be particularly muscular, though.But the improving trend is, no doubt, there.