Poland’s industrial production grew 1.6% year on year in constant prices in October (chart), after a revised fall of 3.3% y/y the preceding month, unadjusted data from the statistical office GUS showed on November 21.

The reading is in line with the consensus but the recovery is chiefly a result of supportive calendar effects, analysts say.

“The overall picture of manufacturing data for the past few months points to a slow improvement, although for the time being this is mainly in industries linked to domestic demand,” ING said in a comment. 

“The improvement in economic indicators at home and in Poland's key trading partners suggests that the worst is over for industry and the turn of the year will see further improvement in activity,” it added.

Seasonally adjusted, output contracted 0.8% y/y in October, following a decline of 0.9% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production expanded 4.1% in October after adding a revised 8.2% month on month in September, GUS also said. The seasonally adjusted m/m reading came in at -0.1%, after a gain of 0.9% m/m in September. 

Broken down by the main segments and in unadjusted terms, output expanded 0.3% y/y in October in manufacturing after a revised fall of 3.9% y/y in September. 

Output in the utility sector jumped 17.2% y/y in October after a revised gain of 4.4% y/y the preceding month. 

In water supply and waste management, production grew 5% y/y in October, which followed a revised decline of 1.1% y/y in September.

Production also increased 5.7% y/y in mining and quarrying in October, after falling a revised 0.7% y/y in the eighth month, GUS data also showed.

Overall, production expanded in 21 out of 34 industrial segments in October in y/y terms, compared to just 13 in September.

Industrial production and other data published so far this week point to the National Bank of Poland (NBP) prolonging the pause in monetary easing. The NBP cut its reference interest rate by a combined 100bp to 5.75% in September and October.

“The prospect of achieving the inflation target is distant and [the NBP], following a shift in rhetoric during the November meeting to a more hawkish tone, will in our view be more cautious in lowering interest rates,” Bank Millennium said. 

“We anticipate no changes in interest rates at least until March 2024, and the room for rate cuts in the subsequent months of 2024 will be limited due to the persistently high wage dynamics and recovering demand,” it added.