An unusual development: strengthening industrial output and weakening retail sales in July

HUNGARY - In Brief 07 Sep 2025 by Istvan Racz

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In recent months, this typically went the other way round. But anyway, the facts are the following: Industrial output grew by 2% mom in July, reducing the yoy decrease to 1.6% in that month, after a 3.6% yoy decrease in Q2. The fixed-base chart (Dec 2010 = 100; source: KSH) looked like this: So, the negative trend of the past nearly three years has not exactly broken, but somehow the last data point on the chart looks a bit more friendly than the previous ones. We would like to add to this that industrial output actually grew a bit in value-added (GDP) terms already in Q2, meaning +0.6% qoq, after -2.1% qoq in Q1. Well yes, the latter still implied -2.3% in year-on-year terms in Q2, following -5.5% yoy in Q1, but a bit of improvement has shown up at last, it seems. It looks like the recent stabilisation of industrial output (and demand) in the Euro Area (see chart below, Dec 2015 = 100; sources: Eurostat, KSH) is starting to have a positive impact in Hungary as well. On the other side, retail sales shrank by 0.5% mom in July, implying +2% yoy in that month, down from +3.1% yoy in Q2. The fixed-base chart (Dec 2010 = 100; source KSH) is as follows: In fact, the latest data point appears to be hanging out of the two-year ascending corridor in the negative direction a little bit. This does not look very impressive, but please, note that in Q2, the 3.1% yoy increase in retail sales turnover went together with a 4.9% yoy growth of households' total consumption expenditure (purchased consumption). The latter, more comprehensive number is much stronger as it also includes the stronger performance of consumer services, most of which is not covered by retail sales. And that is ...