Macro Monitor – July 2023


At its meeting in July, the Monetary Council of the central bank did not change the base rate (13%) but continued to cut the policy rate. The central bank cut its effective rate, the overnight deposit facility rate, by 100 basis points to 15.0%.

Raw data show that retail sales decreased by 12.7%, while calendar-adjusted data show that it decreased by 12.3% in May 2023, compared to the same period of the previous year. Within this, sales decreased by 7.3% in specialised and non-specialised food shops and by 10.9% in non-food shops. The turnover volume of petrol stations fell by 25.9%, exceeding the other main groups.

In July 2023, the value of the SZIGMA CI indicator, which provides feedback on the current state of the Hungarian economy, measured until June 2023, shows that the economic growth rate is improving, as the indicator has been only slightly in negative territory and is approaching zero, the historical trend.

The other indicator, SZIGMA LEAD, is a short-term indicator for the future of the Hungarian economy. The indicator continues to show a double turnaround, firstly indicating a positive stronger economic growth. Second, it indicates a stagnation and decline in the growth rate.

In an environment of higher interest rates and higher inflation, the trend towards a preference for premium Hungarian government bonds with above-inflation yields over those with fixed yields continued.

Labour market expanded in summer 2023

In June 2023 (three-month moving average), the seasonally adjusted activity rate of the population aged 15-74 was 67.35% (4,926,000 persons), which means a labour market growth of 66,000 compared to the same period of the last year. In the period under review, the seasonally adjusted number of employees was around 4,732,000, an increase of 19,000 and 30,000 respectively compared to the previous quarter and the same period of the previous year. The rise in unemployment observed in previous months came to a halt, with 193,100 people unemployed, an increase of 36,000 compared to the same period last year.

• The SZIGMA indicator system

The SZIGMA (abbreviation of the Hungarian name “Századvég Index a Gazdasági Momentum Alakulásáról”, in English: Századvég Index of the Development of Economic Momentum) is a simultaneous and preliminary indicator system developed by Századvég for the Hungarian economy.

It is crucial for economic policymakers and analysts to have an accurate picture of the state of the economy, but statistical data are often available with considerable delays. In contrast, the SZIGMA indicators provide information on the economic cycle and the business cycle within 30 days of the reference month, on a monthly basis.

The indicator system consists of two indicators, the SIGMA CI, which summarises the current state of the economy, i.e. information extracted from simultaneous variables, and the SIGMA LEAD, which provides preliminary information on the expected economic trajectory. A positive CI index means that economic growth is above the historical trend, and a negative CI index means that growth is below the historical trend. The SIGMA LEAD indicator provides a short-term forecast for a 9-month period. If the SIGMA LEAD indicator is positive, growth is expected to be above trend in 9 months’ time (i.e. three quarters of a year later), while if it is negative, growth is expected to be below trend in the near future.