Poland's industrial output solid result in Sept. due to base and calendar effects (opinion)
Poland's industrial production growth in September exceeded analysts' expectations (7.4 percent year-on-year increase versus 5 percent forecast). In their comments following the data release, economists pointed out that the solid result was due, among other things, to the low base and calendar effects. However, the sector may perform worse in the coming months.
"Industrial output has improved significantly after a weaker previous month, which is starting to become a pattern. The data turned out to be much better than average market expectations," chief analyst at Bank Pocztowy Monika Kurtek wrote in an e-mail.
She pointed out that the September growth rate was influenced, among other things, by a higher number of working days (one more than in August this year and September 2024), "but this is certainly not the only reason for the acceleration."
Kurtek stressed that the Polish industry is closely linked to German industry and orders there, which is why fluctuations there have a direct impact on Poland.
"The data therefore suggest an acceleration in GDP growth. Other data, such as retail sales and construction and assembly production, are still missing to complete the picture, but it can already be estimated that GDP growth in the third quarter of this year was at least 3.6 percent year on year," the analyst assessed.
"This would confirm the scenario of a gradual acceleration in economic growth, and in my opinion, we will see the peak of this acceleration next year, when it may periodically exceed 4.0 percent year on year," she concluded.
The analysts at Poland's largest lender by assets PKO BP assessed on X that the September industrial output data is a solid sign of recovery after a weak August and proof that the manufacturing upturn is really gaining momentum.
"An additional working day helped, but the scale of growth is still surprising – month-on-month growth was 4.1 percent," they pointed out.
"September's growth is not a recovery in one sector, but a broad rebound – improvements were seen in most industries," the experts added.
As they concluded, after the summer slowdown, Polish industry is returning to growth, driven by new orders and a revival in investment.
"(...) Time for a specific Rorschach test. Pessimists will see a black ellipse (3-year sideways trend). Moderate optimists will see a red one (something will start happening from 2024). We believe that it will soon break upwards," mBank analysts wrote on X.
"Manufacturing itself suffers from the same problem. The dynamics are more or less in line with the linear trend (quite good for an 'industrial decline'), which, of course, will imply a decline in growth in percentage terms over time. Well, convergence," they added.
As the experts assessed, the short-term implications of today's publication are clear.
"We are heading towards higher GDP growth in the third quarter. (...) Surprises never come singly, so we are also counting on construction and sales," mBank analysts concluded.
The analysts at listed lender ING BSK echoed that the solid growth in September happened partly due to the number of working days and the low base.
"(...) but difficult months lie ahead due to the slowdown in Germany and production stoppages and plant closures in the automotive sector," they wrote on X.
The analyst team of Pekao lender called the result "phenomenal" and pointed that the September data point to a new record in Poland's industrial output.
"However, it should be remembered that such spikes have happened before, and the end of the downturn in the automotive industry contributed to this," they stipulated.
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Poland's stats office GUS announced on Monday that industrial production in September increased by 7.4 percent year on year and by 16.0 percent on monthly basis. Analysts surveyed by PAP Biznes had expected the industrial output to grow by 5.0 percent year on year and by 13.5 percent in monthly terms.
After eliminating the impact of seasonal factors, industrial output in September was 5.7 percent higher than in the prior year period and 4.1 percent higher than in the previous month.
In turn, Poland's industrial output prices fell by 1.2 percent year on year, while declining by 0.2 percent month on month. Economists had expected a year-on-year decline of 1.0 percent and a monthly decrease of 0.1 percent.
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