Sentiment Fades in Hungary Despite Labor Force Improvement

Talking Points:

• 
  Economic Sentiment in Hungary falls from 0.2 to -2.9
  


• 
  4th quarter Unemployment Rate drops 1.8 pp to 7.1%
  


• 
  USD/HUF consolidates under 2015 High
  

Despite the 4th quarter’s unemployment rate falling below the long-term average, Hungary’s Economic Sentiment Index has dropped to the lowest level in 5 months. With GDP expected to expand at an annual rate of just 2.0% (down from 3.2% in 2014) both business and consumer confidence has faded, dragging the overall index down to

-2.9.

Business Confidence was nearly halved in January, dropping from 8.1 to 4.4. Within the business sphere, the Construction Index fell to its lowest point in 10 months while the Trade Index declined more sharply in January than in December. The change in consumer confidence was more drastic; the index fell to -23.8—a level similar to that of fall 2013. The nation’s financial situation and savings capacity were assessed as worse by consumers while thier unemployment concerns increased. The latter concern perhaps out of place given the 4th quarter‘s employment results.

Headline unemployment fell 1.8pp to 7.1% in the 4th quarter, contributing to the 2.5% decline in the annual unemployment rate (7.7%). Year-over-year all age groups within the index saw the following improvements: ages 15-24 unemployment fell by 5.8%, ages 25-54 unemployment fell by 1.7%, and ages 55-64 unemployment fell by 1.5%.

USDHUF Daily Chart

Chart Created by Walker England Using MarketScope2.0

Sentiment Fades in Hungary Despite Labor Force Improvement