Construction and assembly production below expectations
Construction and assembly production growth fell from -1.1% YoY in March to -4.2% in April, came in below both the market consensus (-0.9%) and our forecast (-2.5%). The slowdown in annual production growth in April was largely due to last year’s high base (seasonally-adjusted construction and assembly production in April 2024 increased by 2.5% MoM). After adjusting for seasonal effects, construction and assembly production decreased by 0.8% MoM in April, marking the fourth consecutive drop. Consequently, in April the construction sector recorded the lowest activity level since September 2022.
Construction and assembly production growth declined in two categories: “construction of buildings” (-10.3% YoY in April vs. -3.4% in March) and “civil engineering works” (-8.3% vs. -4.9%). Only companies involved in “specialised construction activities” recorded an acceleration of production to 10.5% YoY in April, up from 6.0% in March.
Recovery in construction sector will be delayed
The decline in production in monthly terms, as well as its breakdown, signal that the recovery in construction and investment is slower than we anticipated. Statistics Poland’s (GUS) sentiment surveys for the construction sector paint a similar picture. The “current domestic order-books” indicator remained relatively stable in January-May, and the “expected domestic order-books” indicator followed a slight downward trend in this period, signalling only limited potential for improvement in the sector in the short-term. We have not changed our view, 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 activity in the construction sector. We still expect infrastructure investments to be the main driver of construction and assembly production in the coming quarters, with households’ housing investments and corporate investments only having a limited impact. Unfavourable supply factors such as decreasing labour supply or limited availability of certain materials will be slowing down the recovery in the construction sector, which will not become markedly visible until 2026, though (see MACROmap of 14/04/2025).
GDP forecast remains unchanged
Today’s worse-than-expected April data on construction and assembly production stand in contrast to yesterday’s more optimistic figures on industrial production, wages and employment in the enterprise sector (see MACROpulse of 21/05/2025). Thus, they do not alter our forecast for GDP growth in 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. We believe that today’s data releases are slightly negative for the PLN rate and yields on Polish bonds.
