First batch of April data significantly above expectations

Temporary improvement in industry?

According to data published by Statistics Poland (GUS), the volume of industrial production sold by enterprises employing more than 9 people rose by 1.2% YoY in April, compared with a 2.4% growth in March (revision from 2.5%), printing well above the market consensus (-0.1%) and our forecast (-1.8%). The slowdown in annual production growth in April was largely due to last year’s high base (seasonally-adjusted production in April 2024 had increased by 5.9% MoM). After adjusting for seasonal effects, industrial production increased by 1.0% MoM in April. Consequently, production in April was 3.4% lower than the all-time high recorded in October 2024. Annual industrial production growth declined in two of the three main industrial segments, i.e. export-oriented industries (1.9% YoY in April vs. 4.2% in March) and construction-related sectors (1.8% vs. 10.6%). Meanwhile, the remaining industrial segments recorded a slight improvement (0.7% vs. 0.1%).

In light of the April deterioration of sentiment in the industrial manufacturing sector (according to GUS and PMI surveys), we do not see April’s better-than-expected production data as signalling a lasting improvement in Polish industry. We believe that short-term growth prospects for export-oriented industries remain unfavourable, primarily due to subdued activity in the Eurozone manufacturing sector, including in Germany, which translates into reduced demand for intermediate goods manufactured in Poland. We expect activity in manufacturing in Germany and the Eurozone to rise markedly in Q4 2025, stimulated by the German fiscal package adopted last April (see MACROmap of 31/03/2025). Prospects for Polish manufacturing in the coming months will be under additional, negative impact of the elevated uncertainty caused by escalated tensions in global trade in the wake of D. Trump’s administration’s tariff policy. The release of May PMI results for the Eurozone and Germany scheduled for tomorrow will be important for the assessment of near-term prospects for Polish manufacturing.

Employment in enterprises exceeds expectations

In accordance with GUS data published today, the employment growth rate for the enterprise sector edged up from -0.9% YoY in March to -0.8% in April, exceeding both the market consensus and our forecast (-0.9%). In monthly terms, employment rose by 2.8k people. Excluding the revision to the sample conducted by GUS in January (see MACROpulse of 20/02/2025), this marked the first increase in employment since November 2024, with the rise mainly attributable to construction (+1.1k people). We believe that the downward trend in employment observed in the enterprise sector over the last couple of quarters is likely to continue in the coming months, driven mainly by adverse supply (decreasing labour force resources, with baby boomers reaching the retirement age) and demand factors (weak external demand, low utilisation of production capacities in manufacturing and the related low investment demand on the part of the enterprises), which are the main reasons behind the employment reduction in manufacturing, trade and services (see MACROmap of 12/05/2025).

Real wage fund growth accelerates

Nominal wage growth in enterprises employing more than 9 people accelerated from 7.7% YoY in March to 9.3% in April, printing well above the market consensus, which was consistent with our forecast (8.1%). The higher annual wage growth was mainly due to last year’s low base effect. In real terms, wage growth in enterprises rose from 2.7% YoY in March to 4.8% in April (the highest since December 2024), with the real wage fund growth rate increasing to 4.0% YoY, compared with 1.8% in March and 2.3% YoY in Q1. This represents a slight upside risk to our forecast, which assumes a slowdown in consumption growth to 2.1% YoY in Q2 from 2.5% in Q1.

Will economic recovery continue in Q2?

Today’s better-than-expected April data on industrial production, wages and employment in the enterprise sector do not alter our GDP forecast for Q2 (2.9% YoY). However, D. Trump’s administration’s tariff policy still carries a downside risk to the expected GDP trajectory for the quarters to come. The significantly stronger-than-expected wage growth observed in April provides strong support for our forecast that the Monetary Policy Council will keep interest rates unchanged at its June meeting. At the same time, we see a rising risk that the Council will refrain from cutting interest rates by 50bps in July. We believe that the overall tone of today’s data from the Polish economy is slightly positive for the PLN and the yields on Polish bonds.