Poland’s industrial production declined 1.2% year on year in constant prices in February (chart), after expanding a revised 1.8% y/y the preceding month, unadjusted data from the statistical office GUS showed on March 20.

The February fall is the first since May 2020 and was more than 2pp below the consensus line, it points ever more clearly to a decline in activity in the industrial sector that 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 coming months should show further declines in production with the lowest point to arrive in April,” PKO BP said.

Seasonally adjusted, output growth fell 1% y/y in February following a gain of 0.3% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production inched up 0.4% in February after falling a revised 3.2% m/m in January, GUS also said. The adjusted month-on-month growth came in at 0.9%, reversing on a fall of 1.3% m/m in January. 

Broken down by the main segments and in unadjusted terms, output declined 0.9% y/y in February in manufacturing after a revised expansion of 2.9% y/y in January. 

Output in the utility sector fell 4.7% y/y in February after a revised fall of 6% y/y the preceding month. 

In water supply and waste management, production slid 0.5% y/y in February, which followed a decline of 3.2% y/y in January.

Production increased 3.5% y/y in mining and quarrying, improving on an increase of 2.8% y/y in January, GUS data also showed.

Overall, production rose in just 15 out of 34 industrial segments in February in y/y terms, down from 21 in January. 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 production of metals and chemicals.

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.

Poland's GDP growth is expected at 1% in 2023 at best.