Industrial production data exceed expectations
In accordance with data published by Statistics Poland (GUS), the volume of industrial production sold by enterprises employing more than 9 people contracted by 1.0% YoY in January vs. a 0.2% growth in December, printing above the market consensus (-1.4%) and our forecast (-1.2%). A key factor driving down industrial production growth between December and January was the statistical effect of an unfavourable difference in the number of working days (in January 2025, the number of working days was the same as in 2024, while in December 2024, there was one day more than in December 2023). Seasonally-adjusted industrial production increased by 0.5% MoM in January, marking the first growth since October 2024.
Production growth in construction-related sectors
Unfavourable calendar effects translated into a drop in annual industrial production growth in 2 out of 3 main segments of the industry, i.e. export-oriented branches (-5.0% YoY in January vs. -4.4% in December) and other categories (0.3 % vs. 2.5%), though in construction-related sectors growth increased from -0.2% to 3.5%. The growth in construction-related sectors was attributable to higher production of “other non-metallic mineral products” (14.2% YoY in January vs. 6.9% in December), which, we believe was mainly driven by the increased activity in construction observed recently (see below). Particularly noteworthy is the persistent and relatively sharp drop in export-oriented branches, including in “vehicles, trailers and semi-trailers” (-15.1% YoY in January vs. -14.8% in December). We believe that short-term growth prospects 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, as reflected by the PMI readings (see MACROmap of 27/01/2025). Consequently, the release of February’s preliminary PMIs for key Eurozone economies scheduled for tomorrow will be of importance in this context.
Construction and assembly production remains positive despite unfavourable calendar effects
Construction and assembly production growth accelerated to 4.3% YoY in January vs. -8.0% YoY in December, printing above the market consensus (0.9%) and below our forecast (5.5%). The growth in construction and assembly production between December and January was recorded despite the statistical effect of an unfavourable difference in the number of working days (see above). In contrast, last year’s low base effect had a positive effect on annual construction and assembly production (see MACROpulse of 21/02/2025). Seasonally-adjusted construction and assembly remained stable between January and December.
EU funds starting to boost activity in construction
Annual construction and assembly production growth accelerated in all three main categories, namely “specialised construction activities” (3.9% YoY in January vs. -9.2% in December), “civil engineering works” (1.6% vs. -0.7%) and “construction of buildings” (7.1% vs. -20.0%). Particularly noteworthy is the growth in the “civil engineering works” category, which has persisted since November 2024. This suggests that the EU funds that Poland is receiving under the National Recovery Plan and Multiannual Financial Framework for 2021-2027 are beginning to boost activity in the construction sector. That would mean that the significance of investments in infrastructure as a factor stimulating activity in the construction sector in 2025 would increase relative to companies’ investments and households’ housing investments, and that the construction sector is beginning to trend higher, given a major share that the first of those categories has in the volume of production sold.
January sees weak growth of employment by historical standards
In accordance with the GUS data published today, the employment growth rate for the enterprise sector fell from -0.6% YoY in December to -0.9% in January, printing below the market consensus and our forecast (both projecting -0.7%). In month-on-month terms, the number of employed people went up by 1.3k in January, marking the weakest January result since 2021 when employment was under the strong, negative influence of the COVID-19 pandemic. Notably, historically January employment data was typically boosted by the annual revision of data on employment in micro-enterprises (with up to 9 employees). In January, companies whose headcount in the preceding year increased above 9 are reclassified to the group of enterprises employing at least 10 persons and are thus included in the population surveyed by the GUS. In 2025, this effect was most likely markedly weaker that in the years prior. To some extent, this may be accounted for by the contraction of the labour force related to the baby boom generation attaining retirement age. The sectoral breakdown shows that the strongest growth of employment between December and January was recorded in manufacturing (+26.1k), with “trade and repair of motor vehicles” seeing the sharpest decline (-29.9k). It should be noted that due to the abovementioned change in the population of companies surveyed by the GUS, comparing the annual growth rate of employment between December and January and, consequently, also the growth rate of the wage fund (essential to making conclusions about household consumer spending) is not justified. A more comprehensive assessment of employment and wage fund trends will be possible following the release of data for February 2025.
Growth of wages slowing down
Nominal wage growth in enterprises employing more than 9 people fell from 9.8% YoY in December to 9.2% in January, printing slightly below the market consensus (9.3%) and our forecast (8.5%). In real terms, wage growth in companies slowed from 4.9% YoY in December to 3.7% in January. It is worth noting that in January nominal wage growth slowed down to single-digits across most reported categories, potentially suggesting that wage pressures in the Polish business sector have eased somewhat.
Slight slowdown of economic growth in Q1
Given the data published today, we stand by our forecast assuming a slight slowdown of economic growth in Q1 (to 3.1% YoY vs. 3.2% in Q4). At the same time, we believe that the overall tone of today’s data from the Polish economy is neutral for the PLN and yields on Polish bonds.
