New KSH data reflects the continuation of a genuinely weak economy in September

HUNGARY - In Brief 08 Nov 2023 by Istvan Racz

---

KSH has just released four new reports with monthly data. Three of these, the ones on industry, retail sales and housing construction, are quite negative, not at all pointing to any rapid recovery of domestic supply and demand. The fourth one, on guest turnover at hotels, is actually quite positive though. In more concrete terms: industrial output growth was +1.2% mom, -5.9% yoy in September, in seasonally and day-adjusted volume terms. Thus, output fell by 4.9% yoy in Q3, after -5.2% yoy in Q2, and it was 4.9% yoy down in the whole of Q1-Q3 as well. On a fixed basis (Dec 2010 = 100), it looked like as follows: Indeed, some marginal recovery could be seen in the last three months, but nothing spectacular. Retail sales growth was +0.1% mom, -7.4% yoy in sda volume terms. Sales dropped by 7.5% yoy in Q3, after +11% yoy in Q2, when very strong and unfavourable base effects were at play, and they were 9.3% yoy in the whole of Q1-Q3. Here is the fixed base (December 2010 = 100) chart on retail sales as well: Unlike the case of industrial output, retail sales have not managed to recover by any little bit since its low point reached in June, substantiating the economy minister's claim that the economy is in the state of a consumption shock. Indeed, yoy real wage growth was very likely back in positive territory for the first time since about a year earlier in September: But consumer demand has failed to pick up so far, suggesting that consumer confidence remains stubbornly low. In more practical language, the financial reserves of a large part of the population must have been depleted by now, and they need to be strengthened first, before consumer spending could start to mate...