Poland’s industrial production contracted 3.2% year on year in constant prices in May (chart), after a revised fall of 6% y/y the preceding month, unadjusted data from the statistical office GUS showed on June 21.

Despite easing contraction in May, industrial output still came 0.2pp worse off the consensus line, pointing to a decline in activity in the industrial sector that is consistent with the weakening of demand amid high – although diminishing - inflation and high interest rates in Poland. 

Unlike in export-oriented segments of the industry, “the continuing decline in non-export segments reflects the weakness of domestic demand in Poland”, Credit Bank Agricole said in a comment on the GUS figures.

Industrial production data and other data published recently suggest that Poland’s economic slowdown might have bottomed out early in the second quarter. 

“We maintain our scenario of a ‘soft landing’ for the Polish economy,” Credit Bank Agricole  said. 

In line with that, the GDP growth rate in Poland will decrease to around 1% in 2023, with no significant increase in unemployment.

Seasonally adjusted, output growth fell 2.4% y/y in May, following a decline of 3.4% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production added 4.4% in May after declining a revised 14.4% m/m in April, GUS also said. The adjusted month-on-month fall came in at 1%, improving slightly versus a decline of 1.6% m/m in April. 

Broken down by the main segments and in unadjusted terms, output declined 2.7% y/y in May in manufacturing after falling a revised 5.4% y/y in April. 

Output in the utility sector declined 6.5% y/y in May after a revised fall of 11.8% y/y the preceding month. 

In water supply and waste management, production slid 2.4% y/y in May, which followed a decline of 3.8% y/y in April.

Production also decreased 11.2% y/y in mining and quarrying, after falling 11.7% y/y in April, GUS data also showed.

Overall, production rose in 13 out of 34 industrial segments in May in y/y terms, up from just 9 in April. 

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.