Statistical effects boosted industrial production growth
In accordance with the Polish Central Statistical Office's (GUS) data, the dynamics of sold production of industry in enterprises employing more than 9 people rose to 9.2% YoY in April vs. 5.6% in March, running slightly above the market consensus (9.1%) and our forecast (9.0%). The seasonally-adjusted industrial production increased by 0.1% MoM in April. The main factor behind higher annual industrial production dynamics between March and April was the statistical effect in the form of a favourable difference in the number of working days (in March the number of working days was 1 day lower than in 2018 while in April 2019 it was 1 day higher than the year before).
Polish industry still resistant to slowdown
The structure of industrial production growth indicates that Polish industry continues to be highly resistant to the slowdown of economic activity in Poland's main trade partners. This view is supported by high production dynamics recorded in April in the export-oriented branches of Polish manufacturing: "electrical equipment” (26.6%) and "other transport equipment” (22.3% YoY). In our view, the main reasons for the resistance of Polish manufacturing to the substantial slowdown abroad are: the buffer in the form of production backlogs, structural changes taking place in recent years and consisting in growing share of imports from Poland in German imports due to high competitiveness of Polish manufacturing, and increase in production directed to the domestic market (see MACROmap of 6/5/2019). In addition, the Polish industrial production in April was supported by on-going high activity of branches producing goods used in construction projects: "rubber and plastic products” (10.6% YoY), "metal products” (9.6%), and "other non-metallic mineral products” (9.2% YoY), due to further recovery in Polish construction.
GDP growth will slightly decelerate in Q2
Today's data on the April industrial production do not alter our forecast of economic growth in Q2 (4.5% YoY vs. 4.6% in Q1). They are also neutral for PLN and Polish bond yields.