Unexpected industrial production drop
In accordance with data published by Statistics Poland (GUS), the sold production of industry in enterprises employing more than 9 people went down by 0.1% YoY in June vs. +4.0% in May (upward revision from +3.9%), printing markedly below the market consensus (+1.6%) and our forecast (+3.0%). Seasonally-adjusted industrial production went down by 0.5% MoM in June, printing 2.3% below its October 2024 peak. Average industrial production growth slowed from 2.5% YoY in Q1 to 1.7% in Q2.
Automotive industry enters the recovery phase
Industrial production growth slowed in all three main industrial segments, i.e. export-oriented sectors (1.6% YoY in June vs. 5.6% YoY in May), construction-related sectors (-0.2% vs. 11.2%) and other sectors (-1.0% vs. 1.6%). However, it is worth noting that the situation is improving in the export-oriented sectors, with annual industrial production growing for the fourth month running. In June, production growth in the “vehicles, trailers and semi-trailers” category was relatively fast (5.9% YoY vs. 5.1% in May). The activity in export-oriented branches is stimulated by increasingly stronger recovery signals from the German industry, particularly the automotive sector (see MACROmap of 14/07/2025). The release of flash PMIs for key Eurozone economies planned for Thursday will shed more light on recovery prospects for export-oriented branches.
Capital goods production is growing
Particularly noteworthy about the data is also a continued growth (four consecutive months) in capital goods production (5.0% YoY in June vs. 10.4% in May). In our view, it mainly stems from the enterprises making investments related to their restructuring and efficiency-improvement processes. This is consistent with our forecast for total investments, which are projected to rise by 7.4% in 2025 and 2026, following a 2.2% drop in 2024.
Construction and assembly production rises for the first time since December 2024
Construction and assembly production growth improved from -2.8% YoY in May to 2.2% in June, printing markedly ahead of market consensus (-1.2%) and our forecast (-0.5%). In June, seasonally-adjusted construction and assembly production expanded by 3.2% MoM, growing for the first time since December 2024. Construction and assembly production growth accelerated in the “specialised construction activities” (20.8% YoY in June vs. 2.6% in May) and “construction of buildings” (8.0% vs. -9.0%), but plummeted in the “civil engineering works” category (-11.0% vs. -1.4%). The data breakdown shown above suggests there are still no signs of recovery in public investments. However, we believe that the decline in the “civil engineering works” category of construction and assembly production will be slower in the coming months.
Coming quarters to bring gradual activity recovery in the construction sector
We have not changed our conclusion, though, that the EU funds that Poland is receiving under the National Recovery Plan and Multi-Annual Financial Framework for 2021-2027 will be boosting the activity in the construction sector in the quarters to come. We still expect infrastructure investments to be a main construction and assembly production growth driver in the quarters to come, and the role of households’ housing investments and corporate investments to remain limited. Unfavourable supply factors such as decreasing labour supply or limited availability of certain materials will be slowing the recovery in the construction sector, which will not become markedly visible until 2026, though (see MACROmap of 14/04/2025).
Prospects for employment in the enterprise sector still unfavourable
In accordance with the GUS data published today, the employment growth rate in the enterprise sector remained stable between May and June, standing at -0.8% YoY, aligning with market consensus, but printing ahead of our forecast (-0.9%). In monthly terms, employment rose by 2.3k people in June. Employment declined primarily in manufacturing (down by 10k people month on month), but it was more than offset by the employment rate growth in other categories, particularly “professional, scientific and technical activities”. In our view, the decline in employment in the manufacturing sector will slow in the months to come amidst the recovery in investments that we expect to see. Nonetheless, we think that the downward trend in employment seen over the last couple of quarters will continue in the months to come despite the growth in June. This will result from a combined effect of adverse supply factors (contraction of the labour force related to the baby boom generation attaining retirement age) and poor external demand.
Real wage fund growth accelerates
Nominal wage growth in enterprises employing more than 9 people went up from 8.4% YoY in May to 9.0% in June, printing ahead of market consensus (8.6%) and our forecast (8.8%). In accordance with the press release published by Statistics Poland, wages were driven up by additional benefits having been paid out: rewards and bonuses (discretionary, annual, semi-annual or quarterly) and pay for overtime work. In real terms, wage growth in companies accelerated from 4.2% YoY in May to 4.8% in June. Consequently, the real wage fund growth for Q2 rose to 3.8% YoY vs. 2.3% in Q1. The data underpins our forecast, in which consumption growth accelerated to 3.3% YoY in Q2 vs. 2.5% in Q1.
Our GDP growth forecast remains unchanged
Today’s data on industrial production, construction and assembly production, and wages and employment in the enterprise sector do not change our economic growth forecast for Q2 (3.4% YoY vs. 3.2% in Q1) and 2025 (3.6% vs. 2.9% in 2024). We believe that the overall tone of today’s data from the Polish economy is neutral for the PLN and the yields on Polish bonds.
