CEE ECONOMY Czech, Hungarian industrial output stronger than expected in November

Jan 7 (Reuters) – Industrial output in the Czech Republic and Hungary rose more than expected in November, showing a pick-up even as car sector woes continue to drag.

The data was more evidence central European economies likely ended 2021 stronger than first thought as industry weathers supply chain crunches and rising input costs.

Czech industry posted its second strongest month this year, showing a 1.6% year-on-year output rise in November, while growing by 4.9% on the month, boosted by machinery manufacturing.

Headline figures in Hungary showed a 2.6% rise in output and 2.9% monthly gain.

The two economies are strongly dependent on car production, which continued to fall in November amid global chip shortages that have slowed automakers’ production.

“This is a strong positive surprise,” Peter Virovacz of ING in Budapest said.

“Until now we saw that industries with less weight could not balance out the effects of shortages on the most important sectors of car manufacturing and electronics, and their troubles dragged down industrial production as a whole.”

In the Czech Republic, while car production was down 7% in November, the data gave a view that industry could give an end-of-year boost to economic growth, which has relied heavily on domestic demand after the end of lockdowns last spring.

The statistics office said new orders rose 9.3% year-on-year, led by foreign demand.

“Industry’s problems with parts shortages or in supply chains are not over, but leading indicators in December already indicated that the situation has gradually improved,” said Jakub Seidler, chief economist for the Czech Banking Association.

Reporting by Jason Hovet in Prague and Anita Komuves in Budapest; Editing by Toby Chopra

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