Calendar effects sink Polish industrial production in April

Calendar effects sink Polish industrial production in April
By bne IntelliNews May 19, 2017

Polish industrial production surprised to the downside in April, contracting 0.6% y/y as calendar effects took their toll, data from statistical office GUS showed on May 19.

At the same time, the reading is well below expectations for annual growth of 2.35%. Analysts insist the data is just a hiccup caused by the late Easter this year, and that the underlying trend in industry is one of strong growth. However, when adjusted, growth still tops out at 4% y/y. In seasonally adjusted monthly terms, output fell 1.2% across the sector.

The fall in April came on the back of falls in two out of the four main industry segments. There was an contraction of 0.8% in the manufacturing segment, while output in mining and quarrying fell 5.9% y/y. Production in the water supply segment expanded 0.8%, while utilities saw production grow 4.8%.

Bank Millennium tries to dismiss the April reading as a hiccup caused by the calendar. “The coming months should bring about an improvement in industry, as suggested by PMI readings in recent months. Growing domestic and foreign demand should support recovery in industrial production, especially with new orders being on the growth trend,” the bank’s analysts noted.

There are more cautious voices, however. “Growth of industry surprised strongly to the downside," Erste writes. "Thus, further acceleration of economic growth may be questioned if in coming months we do not see strong rebound in monthly indicators.”

The construction sector, meanwhile, maintained growth, expanding 4.3% y/y. Although a slowdown against the boom of 17.2% in March, the reading suggests investment continues to recover and should join consumption in driving growth in 2017. Calendar-adjusted, growth was a solid 9.2%.

The Polish economy expanded 2.7% last year, with investment especially disappointing. However, GDP surged to 4% y/y in the first quarter.