At its July meeting, the Monetary Council of the central bank continued to cut both the policy rate and the base rate, as it had done in the previous month. As a result, the base rate (and the policy rate) in Hungary is currently at 6.75%, after a 25 basis point cut.
In May, retail sales increased by 3.6% year on year on both a raw and calendar-adjusted basis. Within this, compared to the same period of the previous year, sales increased by 6.3% in specialised and non-specialised food shops, 1.8% in non-food retailing and 0.7% in automotive fuel retailing.
The monthly value of the SZIGMA CI indicator, which provides feedback on the current state of the Hungarian economy, was -0.115 up to June 2024. This is down from the previous month’s index value of 0.082. This means that the Hungarian economy is still growing at a rate below its historical trend rate.
The other indicator, SZIGMA LEAD, a short-term indicator for the future of the Hungarian economy, forecasts above-trend growth by the end of the forecast horizon. A slight pick-up in above-trend growth is expected by the end of the forecast horizon.
In June 2024, consumer prices rose by 3.7% on average year on year.
Labour market expanded in summer 2024
In June 2024,[1] the seasonally adjusted activity rate of the population aged 15–74 was 68.2% (4,968,000 persons), which means a labour market growth of 44,100 compared to the same period of the last year. In the period under review, the seasonally adjusted number of employees reached 4,753,000, a year-on-year increase of 21,400. The number of the unemployed continued to decrease, to 215,500, a year-on-year increase of 22,700. The employment trends of the previous months seem to be slowly normalising, with the unemployment rate for the youngest age group, 15-24, rising last year and now falling again, while the increasing activity of the oldest age group has been maintained.
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.
[1] Three-month moving average
