Industry and retail sales figures for March to be read cautiously

HUNGARY - In Brief 06 May 2021 by Istvan Racz

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At first glance, March industrial output (+16.1% yoy) looks spectacular, whereas retail sales for the same month (-1.7% yoy) looks ugly. But base-period Covid circumstances need to be taken into account in both cases. Actually, industry was up mildly, by a quite normal 0.4% on mom basis in March, and retail sales also grew by 0.8% within the month, both numbers reflecting a moderate-pace recovery, despite the 3rd wave Covid lockdown measures that started exactly then.Looking back to March 2020, industrial output just started to collapse then (-10.2% mom), due to the widespread Covid-stoppages at Western European manufacturing units and the clogs and bottlenecks in the international delivery of components. In the same month, Hungary was also running fast towards the 1st wave lockdown regime, the first public reaction to which was a sweeping shopping panic. The latter pumped up the retail sales of basic consumer goods temporarily, against which basis March 2021 looks quite weak in yoy comparison.Regarding the net impact on Q1 GDP, to be reported in first estimate on May 18, it is hard to know really. In value-added/GDP terms, our forecast includes zero growth (0% qoq, -0.1% yoy) for industry, but the actual +5.4% yoy result at the level of gross output is promising a much better outcome. For private consumption, our Q1 forecast is -2% qoq, -4.6% yoy. Retail sales, about half of this total, and in fact the half which most likely performed better than the other (services), fell by 2.8% yoy, which seems to be suggesting a somewhat weaker outcome for the whole of private consumption. On the supply side, this should be reflected in weaker than expected services, where we have...