Unimpressive industry and retail sales figures once again in June and Q2

HUNGARY - In Brief 07 Aug 2024 by Istvan Racz

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Industrial output grew 0.5% mom but fell 3.8% yoy in June, following -4.7% yoy in May. Retail sales fell 0.1% mom but grew 2.6% yoy in the same month, after 3.4% yoy expansion in May. For sure, these figures could be blamed partially on volatility between months, so it may be better to look at quarterly data. Here we see the unimpressive -2.3% qoq, -3.5% yoy growth numbers, the yoy decrease deepening from -1.5% yoy in Q1. For retail sales, the corresponding growth data is +0.1% qoq, +2.9% yoy, the latter after 1.7% yoy in Q1. So, in Q2 the slump actually deepened in industry, whereas there was only a slight acceleration seen in the expansion of retail sales. The good news is that the merchandise trade surplus is still quite big, reaching 7.8% of GDP in H1, up from 4.8% in H1 2023. Indeed, this is the result of the combination of weak exports with even weaker imports. All this should push the MNB towards further loosening, although at today's EURHUF 398, it is less likely to mean an immediate further base rate cut in August. A rate reduction of 25bps in September seems more likely, as we see it now.