Improving industrial output growth in February
Industrial output grew 4.8% mom, 3.7% yoy in February, which means quite good-looking figures. The monthly growth rate was perhaps less impressive, as it represented a bounce-back from a period when car manufacturers were forced to halt production temporarily, due to a global shortage of essential inputs (microchips). But the yoy number was by far the best since the start of Covid last year, or indeed since the very start of 2020. Here follows a chart on yoy growth rates, courtesy of KSH:Even so, the first two months together were understandably much less positive, as the weak January pulled down the cumulative growth rate to 0.6% yoy, slightly weaker than the 1.5% yoy growth figure recorded one year earlier.Details are not available yet, as usual for preliminary data, but the usual suspect, on which February's improvement could be blamed most, would be export sales (about two-thirds of total output). Anyway, improving output levels were helped by an 8.1% yoy rise by industrial producer prices (9.5% yoy for exports 5.2% yoy for domestic sales), which were pushed up in turn by a 6.1% yoy average depreciation of the HUF against EUR. And here comes a bit of a prospective policy conflict: the MNB loves to support growth and it has a done a lot to this end since Covid started. However, it is also aiming at slowing down the pace of HUF depreciation currently, to keep inflation below 4%. Sooner or later, the two objectives will likely get in conflict with each other.We do not believe the MNB could give up its inflation target, but even so, it will be better to watch their move all the time.