Weak retail sales & construction data in February

HUNGARY - In Brief 16 Apr 2021 by Istvan Racz

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Retail sales fell by a rather weak 5.2% yoy in February, following -2% yoy in the previous month. To a great extent, this was a lockdown / 3rd wave impact, i.e. greatly Covid-related. Even though the government tightened Covid restrictions only from March 8, the 3rd wave of the epidemic was steeply picking up throughout the whole of February, and the public was well aware of it. Moreover, many people fell into a panicky mode because of the severity of Covid, which must have undermined consumer confidence. Here is a chart on yoy growth rates, sda, in volume terms:Construction output fell by 15.6% yoy in February, also a sharp downturn that followed a trend of initial recovery. The chart below also reflects yoy changes, sda, in volume terms:In the first two months of this year, construction output fell by 3% yoy. The key factor behind the February number must have been similarly Covid, although demand, especially in housing construction, has been generally weak lately, despite the government's efforts to provide extra housing support to families.Recently, KSH reported about a relatively strong industrial output number for the same month, so the performances of various segments of the economy appear to be quite different. The reason is that industrial output is predominantly driven by external demand, whereas consumption and construction are domestic.