Industrial production below expectations
In accordance with data published by Statistics Poland (GUS), the volume of sold production in enterprises employing more than 9 people declined by 2.0% YoY in February compared to a 0.9% drop in January (upward revision from -1.0%), printing below market consensus (-1.2%) and slightly above our forecast (-2.2%). Industrial production growth between January and February was largely driven down by the statistical effect of an unfavourable difference in the number of working days (in February 2025, there was one day less than in the previous year, while in January 2025, the number of working days was the same as in January 2024). Seasonally-adjusted industrial production shrank by 0.2% MoM in February.
Outlook for production in export-oriented sectors still unfavourable
Unfavourable calendar effects resulted in a slowdown of annual industrial production growth in all main segments of the industry, i.e. export-oriented branches (-2.6% YoY in February vs. -5.0% in January), construction-related sectors (1.4% vs. 3.5%), and other categories (-2.3% vs. 0.3%). Notably, production decline persisted in export-oriented branches, including in particular those with links to the automotive industry such as “vehicles, trailers and semi-trailers” (-4.8% in February vs. -15.1% in January) or “electrical equipment” (-7.3% vs. -7.7%). In our opinion, short-term growth prospects for export-oriented branches remain unfavourable, primarily due to a subdued activity in the manufacturing sector in the Eurozone, including Germany, which translates into a reduced demand for intermediate goods manufactured in Poland, as suggested by the PMI readings (see MACROmap of 24/02/2025). It is also worth noting that production kept growing in construction-related sectors due to a stronger performance in “other non-metallic mineral products” (1.9% vs. 14.2%) and “metal products” (1.2% vs. -1.0%) categories. Growth in those categories is supported by stronger activity in the construction sector (see below).
Decline in construction and assembly production
Construction and assembly production growth slowed from 4.3% YoY in January to 0.0% in February, falling below the market consensus (2.3%) and our forecast (1.0%). Construction and assembly production slowdown between January and February was mainly caused by the statistical effect of the unfavourable difference in the number of working days (see above). Seasonally-adjusted construction and assembly production declined by 2.3% MoM in February.
Activity in the construction sector supported by EU funds
Unfavourable calendar effects had a negative impact on the momentum of the construction and assembly production, which dropped in 2 out of 3 main categories, i.e. “specialised construction activities” (3.0% YoY in February vs. 3.9% in January) and “construction of buildings” (-3.8% vs. 7.1%). Production growth accelerated in the “civil engineering works” category (1.7% vs. 1.6%), which suggests that EU funds coming into Poland under the National Recovery Plan and Multi-Annual Financial Framework for 2021-2027 are beginning to boost the activity in the construction sector. That would mean that the significance of investments in the infrastructure as a factor stimulating the activity in the construction sector in 2025 would increase relative to companies’ investments and households’ housing investments, and that the construction sector is beginning to trend higher, given a major share that the first of those categories has in the volume of production sold.
Are restructuring processes in the industrial manufacturing sector over?
In accordance with the GUS data published today, the employment growth rate in the enterprise sector remained stable between January and February, standing at 0.9% YoY, and aligning with market consensus and our forecast. In monthly terms, the number of employed in February fell by 3.5k. To some extent, the decline observed over the last couple of months may be explained by the contraction of the labour force related to the baby boom generation attaining retirement age. Sector-wise, the strongest growth in employment between January and February was seen in “accommodation and food service activities” (+0.9k), “manufacturing” (+0.8k), and “water supply, sewerage, waste management” (+0.7k) categories, while the strongest drop was reported in the “administrative and support service activities” (-3.1k). In this context, particularly noteworthy is the increase in employment in the manufacturing sector, which in our view can be linked to a recent improvement in conditions in that sector (see MACROmap of 03/03/2025).
Wage growth continues to slow
Nominal wage growth in enterprises employing more than 9 people fell from 9.2% YoY in January to 7.9% in February, coming in below the market consensus (8.7%) and our forecast (8.6%). In real terms, wage growth in companies slowed from 4.1% YoY in January to 2.9% in February. It is worth noting that in February nominal wage growth slowed down to single-digits in a vast majority of the reported categories, potentially suggesting that wage pressures in the Polish business sector are easing. It is consistent with our scenario of a strong inflation drop, including core inflation, in H2 2025. We will present our updated inflation scenario in the next MACROmap.
Our GDP growth forecast remains the same
On the one hand, GDP growth data for Q4, which came in stronger than we expected, combined with recently released monthly data (particularly on retail sales) are indicative of a slight upside risk to our GDP growth forecast for the quarters to come. On the other hand, the Trump administration’s tariff policy still poses a downside risk to GDP growth prospects (and to external demand prospects in particular), albeit Poland’s exposure to that risk is relatively low. Consequently, we believe that risk factors that might affect our GDP growth forecast for 2025 (3.5% vs. 2.9% in 2024) are generally balanced. We believe that the overall tone of today’s data from the Polish economy is slightly negative for the PLN and the yields on Polish bonds.
