Today Statistics Poland published data on industrial and construction output. In both cases, an increase of about 1.5% yoy was expected. However, the first surprised to the upside (2.9% yoy), the second slightly disappointed (0.6% yoy). Considering the differences in sector sizes, July overall turned out better than forecast. What do we find in the details of today’s releases?

The acceleration in industrial production compared to June (-0.4% y/y) looks good on paper, the more so given that the sector did not benefit from additional working days. Nevertheless, this is almost entirely the effect of a low base last year. July 2024 was simply a very weak month for Polish industry—according to some metrics, the worst July in the series. This year’s July is quite normal in terms of production growth, hence the return to low single digits. Month-over-month, seasonally adjusted industrial production increased by 0.9%, which is close to the long-term trend.

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

Source: Statistics Poland, Macrobond, Pekao Research

The situation of Polish industry, as shown by hard data, is a classic case of the glass being half empty. On one hand, 2025 saw fewer negative surprises and the external environment seems to be improving (as indicated by this morning’s European PMI readings). On the other hand, cumulative industrial production growth this year is only 1.5%, and production remains below multi-year highs set at the turn of 2021/2022. One could argue that the previous peak was artificial, driven by panic restocking after pandemic disruptions, but industrial production and value added in the sector have generally stagnated for three and a half years. This year’s results do not yet provide grounds to declare an end to this medium-term stagnation.

Construction has been a rather thankless topic this year—it was expected to be a star, but so far it has generally disappointed. In July, annual growth in construction and assembly production did stay positive, but only just. The reasons for the disappointment are clear thanks to detailed quarterly data, which show that infrastructure investment roll-out remains slow, while residential construction provides the largest positive contribution to production growth. The rebound in residential construction has until now been seen as the end of a mini-cycle (linked to support programs for borrowers in 2022-23). For months, decreases in building permits and new housing starts suggested that the sector’s contribution to GDP growth would soon turn negative—until looser monetary policy starts to take effect. Today’s data don’t change this picture much, but do slightly shorten the expected period of stagnation in this segment. In July, activity in residential construction rebounded: the number of issued permits and housing starts surged. One might say that supply responded to increased demand, and further monetary easing will support a revival in the housing market.

Activity in Residential Construction (number of units, s.a.)

Source: Statistics Poland, Macrobond, Pekao Research