Hungarian business sentiment sank to a three-year-low in September, posting its biggest monthly fall in more than a decade as companies in industry, trade and services turned gloomier about their prospects, a survey showed on Monday.
Think tank GKI’s business sentiment indicator plunged to 0.9 points in September from 7.5 points in August, hitting its lowest since October 2016, it said.
“The European Union’s economy is slowing. It continued to slow in the first half,” said Gabor Karsai, one of the authors of the survey. “It is true that we have not fully felt the effect of the German slowdown but we are not immune to it.”
He said the U.S.-China trade war also hit sentiment.
Analysts polled by Reuters last week forecast Hungary’s growth slowing to 3.3% next year from a 4.65% pace projected for 2019 as expansion in the euro area and its powerhouse Germany, Hungary’s main trading partner, decelerates.
“Business sentiment has been deteriorating practically since the start of the year. Except for construction, sentiment worsened across all sectors in September, especially in industry and services,” the survey said.
Industry confidence was at a five-year-low as companies projected a weaker outlook in production, stockpiles and the stock of orders, including exports, it said. Construction confidence rose slightly after falling for nearly a year.
Trade confidence fell to a six-year-low as the outlook for orders darkened, the survey said. Services confidence plunged to a three-year-low as turnover prospects deteriorated significantly, GKI said.
Except for construction, employment plans worsened across all sectors, driven by services. The assessment of Hungary’s economic prospects as a whole worsened significantly among most companies in September according to the survey.
The prospect of a slowdown after years of above-average economic growth triggered an open clash between Hungary’s top economic policymakers earlier this month.
Consumer confidence continued to rise, however, scaling a 17-year-high in September, bolstered by record-low unemployment rates and strong wage rises.
“The weakening Hungarian growth picture is perfectly in sync with that of the EU, albeit with some delay,” GKI’s Karsai said.
“Consumer confidence was this high in August 2002. Wages are rising, inflation is tolerable and the jobless rate is very low,” he said. “No wonder people are optimistic, but obviously the business confidence is bound to have an impact.” (Reporting by Gergely Szakacs; Editing by Hugh Lawson)