Hungarian manufacturing PMI fell significantly, and is now well into recession territory

From May to June, the Hungarian manufacturing Purchasing Managers’ Index (PMI) fell significantly and is now well into recession territory, according to a statement from the Hungarian Logistics, Purchasing and Inventory Management(Halpim).

Among the PMI sub-indices, the new orders index fell from the previous month and was under the 50-point mark. The sub-indices have fallen overwhelmingly, with most of them in recessionary territory.

According to Halpim, the production volume index also dropped and was below 50.

The employment index slipped and indicated a contraction for the first time in 20 months.

The delivery times index rose but stayed under 50.

The gauge of purchased inventories showed a “strong decline” and was under the 50-point mark.

The market prefers to watch the PMI, as it is the quickest indicator of the current state of the economy, as preliminary figures are typically released in the middle of the month and the final figures at the end of the month (in Hungary only the latter is usually released). However, its predictive role is very limited, and the figures seen in recent months are even more difficult to interpret than usual.

As we wrote before, the Hungarian economy will stagnate this year. The yearly inflation will be around 17.7 percent, Fitch Ratings’ new analysis read here.