Macro monitor – September 2023


At its meeting in September, 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 13.0%.

Raw data show that retail sales decreased by 7.7%, while calendar-adjusted data show that it decreased by 7.6% in July 2023, compared to the same period of the previous year. Within this, sales increased by 4.1% in specialised and non-specialised food shops and by 5.5% in non-food shops. The turnover volume of petrol stations fell by 20.5%, significantly more than the other main groups.

In September 2023, the SZIGMA CI indicator, which reflects the current state of the Hungarian economy, was -0.01 until August 2023, indicating that the growth rate of the Hungarian economy has reached a turning point. This means that the growth rate of the Hungarian economy grew below the historical trend rate but has now reached it and is expected to exceed it from now on.

The other indicator, SZIGMA LEAD, is a short-term indicator for the future of the Hungarian economy. This indicator is still showing a double turnaround, first a positive stronger economic growth, and then a stalling 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.

Construction output stepped out of a seven-month downward trend in July

In July 2023, the annual volume of construction output increased by 3.4% in terms of raw data. This growth was driven by the fact that the stock of new contracts increased by 16.7% year on year in the previous month, including a 40.1% increase in new contracts for buildings. Construction output volumes varied across the main construction groups. While the construction of buildings increased by 11.6% year on year, the construction of civil engineering works (roads, bridges, railways, complex industrial installations, pipelines, etc.) contracted by 5.0% year on year. The decline in output in the latter group was mainly due to a reduction in orders from the state and local government.

• 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.