Polish industry in a horizontal trend
No fireworks in the industrial production reading for September. Seasonally adjusted figures show stagnation (-0.2% month-on-month), with no compelling signs of a potential rebound. The coming months are likely to follow a similar pattern, with more substantial arguments for the recovery of domestic industry expected only in 2025.
Polish industry in a horizontal trend
Polish industrial production fell in September by 0.3% yoy slightly below the consensus (+0.3%) and after a 1.2% yoy drop in August. The slight acceleration in the industrial production growth is the result of more favorable pattern of working days compared to the previous month and is by no means a signal of improvement in domestic manufacturing. In a seasonally adjusted terms, production grew at a similar pace compared to that from a month ago (0.4% yoy vs. 0.6% in August). In short, Polish industry is stuck in a horizontal trend and there are currently no indications that this tendency will change. The reasons for the continuing weakness of industry remain unchanged. The rebound of domestic demand is progressing at a snail's pace, while consumer sentiment among Poland's main trading partners can still be described as recessionary. Interest rate cuts in the eurozone still have little impact on the improvement of the economic situation in the eurozone. And until the European consumer (and industry) gets up from its knees, stagnation will prevail in Polish manufacturing.
Industrial production (%yoy)
Source: StatOffice, Pekao Research
A positive note in today's reading is a decent result of manufacturing. It recorded quite a strong growth in monthly terms (+9.7% mom), which translated into a slight decline (-0.3%, similar to the headline) in annual terms. Food and paper production, as well as other transport equipment (excluding cars) remain strong compared to other sections. On the other hand, export industries - electrical equipment, machinery and metal production – remain weak. Additionally, mining continues to weigh on industry, with production falling by over 6% yoy in September.
We can describe September's data as neutral to our view of the domestic economy, as the continued stagnation in production is consistent with our scenario for the current year. Thus, we maintain our forecast of 3% GDP growth in 2024. We will not see any stronger arguments for industry's recovery, and thus its positive impact on economic growth, until next year. At that time, the Polish economy will shift into second gear, and the domestic industry will have far more arguments supporting its recovery than it does now.
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