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Hungary July manufacturing PMI suggests recession may be ending

Following a ten-month deep sea cruise Hungary's manufacturing industry has come very close to stagnating, the latest purchasing manager index (PMI) data published by the Hungarian Association of Logistics, Purchasing and Inventory Management (HALPIM) showed on Monday. Although it is too early to expect an upturn in the short run, the sector may be gliding towards the drop zone.

Hungary's manufacturing PMI stood at 49.2 in July, up by 3.2 bps from June.

A PMI index figure above 50 indicates expansion while a figure below 50 shows contraction in economic activity.

The index has been above 50 points for more than three years before it dropped to 42.6 in October last year and hit its all-time low at 38.5 in January this year.

Although it gives reasons for hope that the index climbed back to around stagnation, a failure to drop further is no basis to believe quick recovery is on the way.


Observing similar changes in the euro zone's PMI index we may start to believe more strongly that the EU economy will indeed hit rock bottom and then start to gather strength in H2, as projected earlier.

The July PMI had been below 50 only twice, in 2007 (49.7) and 1996 (49.5).

It has never happened in the past 15 years that Hungary's manufacturing PMI was in the negative territory for ten months in a row. The previous record was a five-month period between August and December in 1998.

All sub-indices bar two were below 50 points in the seventh month of the year.

The PMI in the euro zone rose to 46.3 in July ay from 42.6 in June.


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