At first glance, Polish industry performed remarkably well in September. Industrial production grew by 7.4% yoy, far exceeding the consensus (4.6% yoy) and our already optimistic forecast (5.9% yoy). In September alone, production rose by 4.1% mom s.a., reaching an important milestone. Production is now higher (and significantly so) than in spring 2022, which suggests the end of a stagnation period in industry that lasted over three and a half years. Nevertheless, we traditionally advise caution in interpreting these data. There are several reasons for this.

Industrial production (February 2020 = 100%, s.a.)

Source: GUS, Macrobond, Pekao Analizy

First, favourable calendar effects contributed to the result – in August, this factor held back production (working day count at -1 y/y), while in September it boosted it (+1 y/y). Economists are not surprised by this, but it is still a significant factor. Industrial production accelerated in September by 6.7 p.p. in yoy terms, with around 4.5 p.p. attributable to the swing in working days.

Second, such a surge in industrial production was not indicated by other data. Sentiment in manufacturing (even ignoring the notoriously unreliable PMI) remains moderate and has not increased significantly in recent months. Meanwhile, the economic sentiment in European industry is still rather weak, and there are no clear signs of a recovery in the hard data on industrial production.

Third, ex post, one can point to sector-specific factors boosting production growth. This is the usual summer culprit, namely retooling shutdowns in the automotive industry. This sector contributed almost 2 percentage points to the overall swing in production mentioned earlier, and we estimate that roughly half of this effect was unexpected. Such shutdowns are not always easy to detect in the data – we did not see a significant negative impact in August’s production, although exports in that period seem to have been more noticeably affected.

Industrial production by main directions (% yoy, MA3)

Source: GUS, Macrobond, Pekao Analizy

These considerations should not, however, obscure the overall picture, which remains positive. Since the start of the year, industrial production has generally been growing in line with the long-term trend and, even if the September surge turns out to be a one-off as the one in October 2024, the likely result will be a return to this emerging trend. In recent months, production has been supported primarily by the rebound in investment and strong growth in domestic private consumption, but the details of the September reading are also fairly optimistic regarding exports (solid growth in automotive, furniture, and the production of electrical and electronic equipment). It’s worth remembering that when the industry picks up, it tends to do so across the board.

Did we overreact by cutting our forecasts for 2025? No. Today’s surprise does not change much – it’s worth a little less than 0.1 p.p. in GDP growth in a single quarter. While it does increase the odds that Polish GDP grew by 4.0% yoy in the third quarter, these are still long odds and the train towards 4% annual average growth has already left the station. We will wait for the publication of September’s construction output and retail sales data before making any further adjustments to our third-quarter GDP growth forecast. Here too, we disagree with the consensus – our forecasts are, respectively, lower and higher than the consensus.