Polish industrial production disappoints with growth of 2.6% y/y in January

Polish industrial production disappoints with growth of 2.6% y/y in January
/ bne IntelliNews
By Wojciech Kosc in Warsaw February 21, 2023

Poland’s industrial production grew 2.6% year on year in constant prices in January (chart), after expanding 1% y/y the preceding month, unadjusted data from the statistical office GUS showed on February 20.

The January reading is 1.4pp below the consensus line, pointing to a decline in activity in the industrial sector at the beginning of the year, which is “consistent with the weakening of demand amid high inflation and high interest rates in Poland and its main trading partners”, Bank Millennium said in a comment. 

The industry’s performance in January came after a strong rebound in the industrial PMI, which raised expectations. Instead, the industrial output may contract in the new few months due to the high statistical base from early 2022, analysts say.

The broader context may be favourable, however, Santander Bank Polska analysts Marcin Luzinski and Grzegorz Ogonek say.

“We believe that in the absence of an energy crisis in Europe and the receding problems with the supply chains, there is a fair chance for a solid rebound in the Polish industrial sector [later in the year].”

Still, the industry is not expected to help Poland’s economic growth much in 2023. The Polish economy is currently slated to expand only around 1% this year.

Seasonally adjusted, output growth dwindled to 0.3% y/y in January following a gain of 5.6% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production slid fell 2.5% in January after falling 6.4% m/m in December, GUS also said. The adjusted month-on-month result came in at -1.3%, easing from an expansion of 0.7% m/m in December. 

Broken down by the main segments and in unadjusted terms, production grew 2.8% y/y in January in manufacturing, easing from a revised expansion of 3.5% y/y in December. 

Output in the utility sector grew 1.7% y/y in January after a revised fall of 17.2% y/y the preceding month. 

In water supply and waste management, production slid 2.2% y/y in January, which followed a gain of 1.8% y/y in December.

Production increased 3.9% y/y in the first month in mining and quarrying, reversing from a decrease of 7% y/y in December, GUS data also showed.

Overall, production rose in 21 out of 34 industrial segments in January in y/y terms, up from 17 in December. The fastest sectorial expansion took place in the production of electric equipment, motor vehicles, trailers and semi-trailers as well as machinery and equipment. Output contracted the most in chemicals and metal production segments.

Industrial production data do not change much in the outlook for Poland’s monetary policy. The National Bank of Poland’s reference interest rate has remained at 6.75% since September. Resuming interest rate increases appears out of the question currently, as inflation is easing too slowly.