New output, trade and inflation data mark moderate slowdown, predict further MNB rate cut

HUNGARY - In Brief 09 Apr 2015 by Istvan Racz

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Industrial output (gross output in real terms) rose 5.8% yoy in February, implying 5.6% yoy growth in Jan-Feb 2015. This looks like continued decent growth. But the right comparison to see how the economy's overall growth dynamics is moving from last year is the one against 7.1% yoy expansion recorded in Jan-Feb 2014. Looking this way marks decent growth with a moderate slowdown from last year. Retail sales (real terms) expanded 6.2% yoy in February, meaning 7.2% yoy average growth in Jan-Feb 2015. Comparing this to 6.6% yoy growth in the same period of 2014 takes us in the opposite direction as the industrial data, marking strong growth with some acceleration. This looks pretty much in line with the development of wages and full-time employment, may be with a marginal strengthening of consumer confidence, at least judged on the basis of January (the latest available) data on the latter series. But external trade data (nominal EUR terms) also signifies moderate slowdown in domestic output. Although merchandise exports rose 7.4% yoy, against a 6.3% yoy expansion of imports, resulting in a rather big, EUR935m, surplus in February, this data still marks some closing up of import growth in early 2015. This is because exports rose by 5.6% yoy against 3.5% growth of imports in Jan-Feb 2015, as opposed to 3.7% yoy export growth and only 0.8% yoy import growth in the same period of 2014. The net result is that the contribution of the merchandise trade surplus to GDP growth fell by about 0.5% point between the first two months of 2014 and 2015, on an annualised basis, of course. CPI-inflation picked up to 0.6% mom in March, taking the yoy rate to -0.6% yoy from -1% yoy in Febru...