Poland’s industrial production declined 1.7% year on year at constant prices in May (chart), after a revised growth of 7.8% y/y the preceding month, unadjusted data from the statistical office GUS showed on June 20.

The reading missed the consensus, which expected a gain of 1% y/y in the fifth month, even taking account of fewer working days. The calendar effect was the main driver of the May fall, analysts say.

"Industrial production continued a period of heightened volatility due to calendar effects,” PKO BP said.

That said, the calendar effect alone cannot explain the protracted weakness of the Polish industry. “After adjusting for seasonality and working days, data indicate stagnation or a slight decline in production levels in recent months. We continue to await signals of a rebound in the industrial sector, but there are indications that the recovery is slightly delayed,” PKO BP also said.

Seasonally adjusted, output expanded 0.7% y/y in May, following a gain of 4.4% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production fell 4.6% in May after a revised fall of 2.3% month on month in April, GUS also said. Seasonally adjusted, output retreated 2.1% m/m after gaining 7% m/m the preceding month. 

Broken down by the main segments and in unadjusted terms, output fell 1.9% y/y in May in manufacturing after a revised expansion of 8.1% y/y in April. 

Output in the utility sector fell 2.3% y/y in May after a revised gain of 0.5% y/y the preceding month. 

In water supply and waste management, production eased growth to 6% y/y in May, which followed a revised gain of 12.7% y/y in April.

Production fell 2.3% y/y in mining and quarrying in May, after growing a revised 6.1% y/y in April, GUS data also showed.

Overall, production expanded in 19 of 34 industrial segments in May in y/y terms, compared to 31 in April.

May industrial production data have analysts more cautious about the speed of economic recovery in Poland.

“We remain moderately optimistic about further economic recovery in Poland and expect real GDP growth of 3% in 2024,” ING said.

“The highest increase in real disposable income for households in two decades will translate into a significant revival in consumption. However, growth will be limited by weak external demand, a relatively strong zloty, and a slowdown in public investments,” ING also said.

Industrial production and other May data also point to the National Bank of Poland (NBP) prolonging the pause in monetary easing, analysts say.

The NBP cut its reference interest rate by a combined 100bp to 5.75% in September and October.