The data published today (industrial production, PPI) for July show a weakening picture of the industrial sector in Poland, which is influenced by the negative external environment, falling orders from the eurozone – delaying the process of the Polish economy’s rebound against forecasts, analysts estimate. The result of the industrial sector in July this year. (-2.7% y/y) turned out to be significantly lower than the forecast of -0.6% y/y.
According to the Central Statistical Office (GUS) today, output sold by industrial enterprises fell by 2.7% y/y in July 2023. On a monthly basis, a fall of 8.5% was recorded. In July this year, industrial production sold was 2.7% lower than in July last year, when an increase of 7.1% year-on-year was recorded, while compared to June this year, it fell by 8.5%. Excluding the impact of seasonal factors, industrial production sold in July was 2% lower than in the same month last year and 1% lower than in June this year.
The market consensus was for an annualised decline in industrial production of 0.6%.
Among the main industrial groupings, July saw a year-on-year decline in the production of consumer durables, down 12.4%; energy-related goods, down 10.5%; and supply goods, down 7.8%. However, there was an increase in the production of investment goods – by 10.2% and a slight increase in non-durable consumer goods – by 1%.
According to GUS today, producer prices fell by 1.7% year-on-year in July this year, while on a monthly basis they fell by 0.7%, for the first time since November 2020.
The fall in PPI producer prices was mainly the result of a statistical base, lower prices for energy carriers than a year ago, but, analysts stressed, “also reflected weakness in manufacturing”. Some economists see no risk of a more negative outlook for the Polish economy due to resurgent domestic demand – investment and consumer.
Below are the most interesting comments from analysts:
“Domestic industry is experiencing the effects of a pan-European downturn in the sector related, among others, to the reversal of the inventory cycle, weaker consumer demand, weakening foreign demand or the delayed consequences of the 2021/22 energy commodity price hike. These processes are mitigated by the ongoing recovery in the automotive sector and the fading rebound in the investment segment related, among others, to the need for an accelerated energy transition,” said to PKO Bank Polski analysts.
“The main factor influencing the deepening of the year-on-year decline in industrial production was the slowdown in industries where the dominant part of sales is directed abroad (2.7% y-o-y in July versus 7.2% in June). ‘Electrical equipment’ (-3.3% y/y in July against 9.7% in June) and ‘motor vehicles, trailers and semi-trailers’ (15.0% y/y against 19.7%) were mainly responsible for the slowdown in activity in export categories. The slowdown in automotive production was partly linked to the postponement (compared to 2022) of the summer holiday break at car factories,” said Credit Agricole Bank Poland senior economist Krystian Jaworski
“GDP dynamics in the third quarter of this year are likely to remain meagre, perhaps still in a slight negative position, and only come out on the upside at the end of the year. The expected rebound of the economy is slipping. For parts of the MPC, this is likely to argue for an early start to interest rate cuts. I expect a rate cut as early as September, by 25bp,” said Bank Pocztowy chief economist Monika Kurtek.
Source: PPI and ISBnews
