Poor December figures for industry and retail sales, not entirely consistent with Q4 GDP flash estimate

HUNGARY - In Brief 06 Feb 2025 by Istvan Racz

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Industrial output fell 1.8% mom, 5.7% yoy in December, the latter after -2.8% yoy in the previous month. Q4 was down 4.1% yoy, full-year 2024 was a decrease of 3.5%, after -4.7% in 2023. As local industry is heavily focussed on exports, all this substantiates concerns about the state of the European industrial (essentially manufacturing) sector. The fixed-base chart (Dec 2010 = 100) looks like as follows: Retail sales dropped 1.2% mom, and it grew marginally, by 0.1% yoy in December, the latter following a much more promising +4.3% yoy in November. Q4 was up 2.7% yoy, slightly worse than +3% yoy in Q3, and full-year 2024 showed 2.8% growth, following a disastrous -7.7% in 2023. The fixed-base chart (once again Dec 2010 = 100) looks much better than that of industry, but it seems that the speed of the recovery of consumer demand (as far as the existing retail sales indicator is able to measure that) continues to be limited, possibly by decelerating nominal wage growth and rising inflation: So, how are these facts consistent with the recently published Q4 GDP flash estimate, which showed only a limited improvement from Q3, but still an improvement, with 0.5% qoq growth after -0.6% qoq in the third quarter? Well, they do not really explain the positive quarterly swing of GDP, but at least they are moving marginally in the same positive direction, even if the foregoing charts do not make that entirely obvious. Industry fell 0.4% qoq in Q4, after -0.6% qoq in Q3, and retail sales grew 0.4% qoq in Q4, after only +0.1% qoq in Q3. But the bulk of the positive shift in GDP growth is certainly not explained by all this; something else must have been there to push up GDP growth a...