UPDATE: Hungary Monthly Industrial Output Rises For 2nd Mo

BUDAPEST -- Hungary's industrial output staged a monthly improvement in June for the second month in a row on stronger domestic demand, the Central Statistics Office, or KSH, said Thursday, adding that a further recovery in July would signal a trend.

Industrial output rose 1.9% in June from May after a 2.6% monthly rise in May. It fell 18.6% in June from a year earlier, compared with an annual 22.1% drop in May. The annual reading was largely in line with the average forecast of three analysts polled by Dow Jones Newswires for a 17% fall.

While May's monthly output pickup was mostly due to a recovery in the car manufacturing industry, the June figure was widely based.

"All manufacturing sectors showed an improvement in general. The crude and food industries are now also behind this. Domestic demand is more a reason [for the rise] than exports," KSH statistician Ildiko Miko told reporters Thursday.

The slight recovery in the annual reading is also due somewhat to the "base effect" of the year-earlier output reading, Miko added.

The monthly figures are adjusted for the number of working days as well as seasonally, and the annual reading is adjusted seasonally. In unadjusted data, June output was also 18.6% down from a year earlier.

In the first half of this year, industrial output was down 22.5% from a year earlier, on an unadjusted basis.

Hungary is undergoing its deepest recession since the fall of communism. It was hit hard by the global economic crisis, which shrunk its export markets dramatically. Previously, its growth had been driven by industrial exports.

Compared with its peers, the Czech Republic and Poland, Hungary's small and open economy is the most dependent on the economic recovery of Germany, its main export market. Hungary was the first European Union country last year to receive financial help from the International Monetary Fund.