Polish industry suffered an accident in August
In August, industrial production rose by 4.3% yoy, 2 p.p. below the consensus estimate and even further from our forecast. What is most surprising is how unremarkable this reading is – the surprise cannot be attributed to a single sector, as the slowdown was widespread and very even. This leaves two Cs on the table: cycle and calendar. The latter option – making up for the August 15 holiday and good weather during the vacation season – is quite tempting as an ex post explanation. Looking at the bigger picture, trends in Polish industry are positive.
Polish industry (end-2019 = 100%)
Source: Statistics Poland, Pekao Research
On paper, the calendar was favorable (working days +1 y/y), but in practice, things were more complicated. Unlike in 2025, August 15 fell on a Saturday this year, which provided an extra day off and reduced the difference in working days. To what extent – it is impossible to say a priori. Nevertheless, weather conditions were favorable, so perhaps the difference in working days should be treated as effectively 0 y/y. This, in turn, would significantly reduce the magnitude of the surprise.
As mentioned above, the slowdown in industry was widespread and uniform – of the 22 manufacturing sectors for which the Statistics Poland (GUS) provides production data, 14 recorded a slowdown. The only sector where the scale of the slowdown is noticeable (by 25 p.p., which reduced overall production growth by 0.6 p.p.) is the production of other transportation equipment. This is a sector whose performance we have highlighted before – in recent months, we’ve gone from negative growth to 60% yoy and are now back near zero. Its link to the investment boom is obvious – after all, the sector’s main product is railway rolling stock.
Production of other transport equipment (% y/y)
Source: Statistics Poland, Pekao Research
Looking at the bigger picture – in industrial production, not much has actually happened. For last month’s disappointment to be considered a sign of a trend reversal, we need more data (so it’s too early) or a context that points in that direction. The latter, however, remains positive – for instance, business sentiment in Poland and Europe has not deteriorated. We will therefore treat August’s industrial production as a typical fluctuation around the trend for this data.
Along with the production data, GUS released the newest producer price index (PPI). We generally do not write about this data, but we occasionally make an exception when we see something interesting, as we do now. August was, in fact, the first month since January 2023 in which PPI inflation was higher than CPI inflation. At that time, however, PPI inflation was falling; now it is rising and has just surpassed the CPI. For us, the crossover of these two inflation rates is an interesting signal for future inflation, and the PPI surpassing the CPI would suggest a rise in the CPI in the coming months. We’ve been expecting this for some time, and it’s nice to see it confirmed.
PPI and CPI inflation (% y/y)
Source: Statistics Poland, Pekao Research
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