Polish industrial production leaves trough in May

Polish industrial production leaves trough in May
By bne IntelliNews June 22, 2020

Poland’s industrial production contracted 17% y/y in unadjusted terms in May, statistical office GUS reported on June 19. The fall follows a record decline of 24.6% y/y in April.

The fall is in line with market expectations. The industrial sector improved somewhat in May thanks to the gradual easing of the lockdown to contain the coronavirus (COVID-19) pandemic, which pummeled output in April. 

A gradual recovery is on the cards in the coming months, analysts say. Still, the government’s decision to impose a three-week shutdown of 12 mines with coronavirus outbreaks poses downside risks to the performance of industry in June, Erste notes.

That could lead to a truly severe GDP fall of at least 10% y/ in the second quarter. In 2020 overall, however, Poland is expected to withstand the shallowest coronavirus-induced recession in the EU with GDP to contract around 4% only.

“[This] week, we will see retail sales data for May and as in the case of industry we expect a milder contraction compared to the previous month. All in all, with the easing of restrictions, real economy should gradually restart operation. However, the return to pre-crisis level will take some time. We continue to see GDP growth at -3.7% this year,” Erste wrote in a comment.

In adjusted terms, industrial production fell 15.5% y/y after declining 24.7% y/y in April, GUS data also showed. In monthly unadjusted terms, output grew 10.1% in May while also expanding 12.2% m/m upon adjustment.

Broken down by key sectors and in unadjusted terms, output in manufacturing retreated 18.6% y/y in May, compared to a fall of 27.5% y/y the preceding month. 

Output fell 14.3% y/y in the mining and quarrying sector in the fifth month after declining 18.8% y/y in April. In the utility segment, production slid 1.6% y/y after falling 1% y/y the preceding month.

Production also fell 2.6% y/y in the water supply and waste management segment versus a decline of 3.1% y/y in April. 

In more detailed terms, production fell in 30 out of 34 branches of manufacturing in annual terms, GUS said. 

Carmakers were hardest hit in May with the segment’s output collapsing 58% y/y. Production also contracted 27% y/y in coal and lignite mining and 26.4% y/y in the general machinery segment.
Production increased 8.1% y/y in the tobacco products segment or in the electrical equipment segment, where output expanded 1.2% y/y, GUS also noted.