Bank Pekao: External factors will make the recovery in industry gradual

21 November 2023

External factors will make the recovery in the Polish industry gradually in the coming months, analysts of Bank Pekao assess. According to them, the economic situation in the euro area and Germany, which is Poland’s main trading partner, will improve next spring as these economies enter the ECB’s monetary easing cycle.

Although the national factor seems to be conducive to recovery (as seen in the mood of industrial enterprises), the fate of Polish industry is linked to the fate of its Western European counterpart, we must therefore look for potential signs of a rebound there. At the moment, it is still in the realm of dreams and expectations. If someone trusts the signals sent by the survey of the sentiment of investors (ZEW and Sentix), then such a signal is already there. The data from Asia, which can be supposed to be pre-emptive in the cycle, also do not look bad at the moment. On the other hand, monetary policy is a key driver of the euro area. If the maximum negative impact on the real sphere is now, then European industry is close to the turning point. However, the extinguishing of a negative impulse is not the same as a positive impulse. The latter is the cuts in the feet and we expect them only in the spring of next year. All this means that the recovery in the Polish industry will be slow in the coming months, according to the bank’s commentary on the data of the Central Statistical Office on industrial production in October.

The return of the dynamics of industrial production in October to the positive levels: +1.6% y/y from -3.1% month earlier is mainly the result of more working days (from -1 to +2 y/y), the bank reported.

In the case of processing, the growth of y/y dynamics did not concern the main export industries.

As part of processing, up-suffle was common, but it is not for all sections. Our attention was drawn to the continuing weakness of the production of electrical equipment, accounting for more than 5% of the total – a decrease of 16.6% YoY in October after a 15% decrease in September. We will be associated with poor foreign demand. The second section, the results of which may disappoint, is the chemical industry, which has also deepened the declines. Here, in addition to the weakness of demand, one can think about the ‘long tail’ of the effects of the energy crisis, it was further announced.

Surprisingly strong, energy production was accelerated from 4.4 to 17.2% YoY, adding 1.5 percentage points to the dynamics of industrial production in general, was also reported.

According to the Central Statistical Office (GUS), sold production of industrial enterprises increased by 1.6% YoY in October 2023. On a monthly basis, there was an increase of 4.1%. In October this year, the sold production of the industry was 1.6% higher than in October last year, when there was an increase of 6.6% compared to the same period of the previous year, compared to September this year, and compared to September this year, it increased by 4.1%. In the period January-October this year, the sold production of the industry was 1.5% lower than in the same period of 2022, when there was an increase of 11.6% compared to the comparable period of the previous year.

After eliminating the impact of seasonal factors, in October this year, the sold production of the industry was 0.8% lower than in the same month last year and 0.1% lower than in September.

The market consensus is an increase in industrial production on an annual basis by 1.6%.

Source: Bank Pekao and ISBnews

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