Industry and retail sales continued to strengthen in July

HUNGARY - In Brief 07 Sep 2026 by Istvan Racz

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Industrial output grew by 1.7% mom, 4.5% yoy in July, following 3.5% yoy growth in Q2 and 1% yoy expansion in Q1. The fixed-base chart (Dec 2010 = 100; source: KSH) clearly shows an appreciably stable trend of material strengthening since the start of this year:Even more strength could be seen in retail sales, which grew 1% mom, 5.1% yoy in July, following 3.8% yoy expansion in Q2 and 4.7% yoy rise in Q1. Here is the identically structured fixed-base chart (Dec 2010 = 100) from KSH on this data:Regarding the explanatory factors, it is important on the industrial output data that performance in July was strong essentially in two key areas only, namely car manufacturing and computers, electronics and optical products, the latter essentially meaning the production of components for AI data centres, which was outstanding already in previous months. Some other important sub-sectors, like food and even EV batteries actually contracted.This profile should also mean stronger exports, but no, the volume of merchandise exports actually fell by 1.6% yoy in July, after a tiny 0.8% yoy expansion in Q2 and a 5% yoy drop in Q1. This was due to the fact that the exports of food, raw materials and energy (like transited gas, oil and electricity) decreased in July, whereas the external sales of machinery and vehicles grew by 3.2% yoy, following a stronger increase in June. The latter was just as one would have expected on the basis of the improving industrial output data, whereas the weak areas of exports show that Hungary is still quite far away from a booming economy.As regards the strength of consumer demand, the combination of election-year income policies and the lack of any fiscal...