Industrial production drops again
In accordance with data published by Statistics Poland (GUS), the volume of industrial production sold by enterprises employing more than 9 people shrank by 1.5% YoY in November vs. a 4.6% growth in October (downward revision from 4.7%), printing markedly below market consensus (-0.2%) and slightly ahead of our forecast (-2.0%). Industrial production growth between October and November was largely driven down by the statistical effect of an unfavourable difference in the number of working days (in November 2024, there was one day less than in the previous year, while in October 2024, there was one day more than in October 2023). Seasonally-adjusted industrial production shrank by 2.8% MoM in November. This means that the strong growth in seasonally-adjusted industrial production seen in November (+4.6% MoM) was a one-off incident, just as we predicted (see MACROpulse of 02/12/2024).
Given the impact of unfavourable calendar effects, the slowdown of annual industrial production growth was broad-based, and was seen in the three main segments of the industry, i.e. export-oriented branches (-5.8% in November vs. 5.9% in October), construction-related sectors (1.2% vs. 4.3%) and other categories (0.4% vs. 4.2%). Reduced activity in export-oriented branches was the main inhibitor of total production growth between October and November. The slowdown was seen in particular in the automotive industry (i.e. in the “vehicles, trailers and semi-trailers” category, where the figures went down from 6.0% YoY in October to -16.4% in November). In our opinion, short-term growth prospects remain unfavourable primarily due to a lower activity in the manufacturing sector in the Eurozone, including Germany, which translated into a reduced demand for intermediate goods manufactured in Poland, as suggested by the PMI readings for November and December. In the next MACROmap, we will present our expectations concerning trends in the Eurozone in detail.
Construction and assembly figures better than expected
Construction and assembly production growth accelerated to -9.3% YoY in November vs. -9.6% in October, running above the market consensus (-10.2%) and our forecast (-11.0%). The increase in the construction and assembly production (without seasonal adjustment) between October and November was reported despite the impact of the aforementioned statistical effect of unfavourable difference in the number of working days. Seasonally-adjusted construction and assembly production increased in November by 2.7% MoM.
Annual construction and assembly production growth slowed in 2 of the 3 reported categories: “specialised construction activities” (-13.0% YoY in November vs. -10.4% in October) and “construction of buildings” (-16.0% vs. -7.9%). As regards the “civil engineering works” category, the decline slowed from -10.2% in October to -3.2% in November, mainly due to the low base effect. We continue to believe that housing constructions will be stimulating the activity in the construction sector in the coming months, the current activity being strongly hampered by the reduced absorption of EU funds. Our conclusion is underpinned by the annual growth data regarding the number of construction permits, which has been trending higher over the last couple of months. We expect the activity in the construction sector to be increasingly stimulated by projects carried out as part of the National Recovery Plan, as signalled by the results of business sentiment surveys of the construction sector, which indicate that businesses’ expectations regarding their future output and order portfolio continue to improve.
Employment in the industrial manufacturing sector keeps falling
In accordance with the GUS data published today, the employment growth rate for the enterprise sector remained stable between October and November, standing at -0.5% YoY, which was above both market consensus and our forecast (-0.6%; same as consensus). The number of employed individuals in November went up by 4.3k MoM. Notably, employment decline in the industrial manufacturing sector (down by 400 FTEs) was relatively mild comparing to the last couple of months. To sum up, today’s data might be indicating that the restructuring processes seen in the Polish manufacturing sector over the last couple of quarters are coming to an end. Such conclusion would be consistent with the rise in the PMI component for employment seen for the second month running (see MACROpulse of 02/12/2024). Given the data published today, we repeat that the scenario of employment plummeting in the enterprise sector in the coming months is unlikely.
Wage growth surprisingly fast
Nominal wage growth in the sector of businesses employing more than 9 employees increased from 10.2% YoY in October to 10.5% YoY in November, printing slightly ahead of our forecast (10.2%) and market consensus (9.9%). The error in the forecast resulted mainly from the underestimated impact of rewards paid out in the mining sector on the Miner’s Day on the total wage growth rate. In real terms, wages in companies rose from 5.0% YoY in October to 5.6% YoY in November. It is worth noting that in most categories named by the GUS in today’s press release, nominal wages grew at more than 10% YoY. Thus, today’s data is indicative of the continuing wage pressure.
Real wage fund growth rate in the enterprise sector being the product of employment and average wages adjusted to take into consideration the changes in prices went up from 4.4% YoY in October to 5.1% YoY in November. Today’s data have no impact on our annual consumption growth acceleration scenario for Q4, though. It will be possible to assess private consumption trends more precisely when we see the retail sales data for November, which is to be published tomorrow.
Economic growth to slow down in Q4
Today’s data have no impact on our forecast of continuing economic growth slowdown in Q4. (to 2.5% YoY vs 2.7% in Q3). At the same time, we believe that the overall tone of today’s data from Polish economy is neutral for the PLN and the yields on Polish bonds.
