Really awful data out on May industry and tourism today

HUNGARY - In Brief 07 Jul 2020 by Istvan Racz

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The Statistical Office (KSH) is making a good contribution to the quantification of the Covid-19 economic impact this week. Earlier today, they released industrial output and guest nights spent at hotels for May. Their freshly reported data is really quite poor in the sense that although they reflect a considerable amount of recovery from the dramatically bad April numbers, that recovery still appeared relatively little compared to the size of the collapses recorded in April.More specifically, industrial output rose by 15.6% mom but fell 27.7% yoy in May, the latter following the -36.7% yoy figure reported for April. Our first reaction is that the monthly improvement was less than the one suggested by the PMI data that we reported yesterday. The second one is that as at pre-Covid times, about two-thirds of industrial output was exported (63% in 2019), the primary cause of the current weakness is also likely to be the global economic go-slow, rather than anything specifically domestic.Output thus decreased by 32% yoy in April and May. For Q2, we have -21.5% yoy for the sector's value-added in real terms in our current GDP forecast table, the one which runs out to -7% for this year's real GDP growth. We are aware, of course, that gross output and value-added are far from being the same, but we know that the total nominal industrial wage bill fell by 6.1% yoy in April, probably meaning some -12% yoy for compensation of employees in real terms, due to inflation and a 2%-point cut in the social contribution tax last July. We do not know anything factual on the gross operating surplus, but the 32% yoy drop of labor productivity in April suggests that it must have collapsed o...