Polish industrial production expanded 11.1% y/y in constant prices in March, data from statistical office GUS showed on April 20.

The reading sees production surge compared with the feeble annual growth of 1.2% seen in February. It was also well above consensus that predicted growth of 7.5%.

Coupled with shockingly good data on construction output – which boomed 17.2% y/y against a drop of 5.4% in February and market consensus of just 1% - the data suggest that the Polish economy boomed in the first quarter of the year. The positive outlook is strengthened by good retail sales data as well.

The Polish economy expanded 2.8% last year, with investment especially disappointing. However, the March data joins a strong set of readings in January to back up the government's insistence that the economy will return to form in 2017. 

March was the fifth consecutive month of growth in industrial production. Adjusted for calendar effects – the month this year had one working day more than in 2016 – growth was still 8.1%, the best result since December 2011, BZ WBK notes.

The headline reading in March came on the back of 12.7% growth in the manufacturing segment, while output in the water supply segment expanded 4.5%. The mining and quarrying segment recorded growth of 0.4%. The only part of the industrial sector to see decline was utilities, in which production fell 0.6%.

The surge in output in the construction sector hints that investment is rebounding to offer private consumption more help in driving economic growth. Investment likely expanded in the first quarter on the back of 3.9% growth in the construction sector in January-March. The data confirm that Polish economy is coming back to life, Bank Millennium claims.