Economic news                                                              

• INFLATION: Core inflation (excluding food and energy prices) eased slightly and levelled to 3.3% y/y in July, down from 3.4% a month before and meeting a broader market consensus.
• INDUSTRIAL PRODUCTION: Poland’s industrial output rose 2.9% y/y in July, broadly in line with our forecast of 3.0% but well ahead of the market consensus of 1.5% and a sharp improvement from June’s 0.4% contraction. The rebound, however, was driven in large part by a favourable base effect, as July 2024 marked one of the weakest summer months for Polish industry in recent memory. On a seasonally adjusted basis, production grew 0.9% month-on-month,  a solid, though hardly spectacular, performance. A gradual recovery in European industrial sentiment is lending some support, but the data suggest that the upswing is still in its early stages rather than signalling a broad-based boom.
• CONSTRUCTION SECTOR: Construction output in July grew by 0.6% y/y, marking a slowdown from June’s 2.2% and slightly missing the consensus forecast of 1.4%. Positive signs come from the residential construction sector, where building permits and new project starts picked up in July. However, infrastructure construction remains stagnant, although local government investment surged by 20% y/y in Q2 2025, offering a bright spot in an otherwise sluggish sector. More about recent readings on industrial and construction outputs can be found here.
• LABOUR MARKET: Wage growth slowed sharply in July to 7.6% y/y, down from 9.0% in June and well below the 8.6% consensus. The surprise stemmed mainly from lower or delayed bonuses in public-sector-heavy industries such as forestry, energy, and mining. Beneath the headline, a broader cooling of the labour market is evident. Employment in the enterprise sector fell by 4,000 jobs versus June, deepening the annual decline to -0.9%, driven largely by cuts in professional and technical services, partly offset by modest gains in manufacturing. The slowdown reflects not only ongoing disinflation but also a gradual easing of labour demand. We’ve written about wage dynamics in greater detail here.
• FISCAL POLICY: The Ministry of Finance has announced an increase in sectoral taxes starting next year. The sugar tax and excise duties on alcohol will rise, with the latter set to increase by 15% in 2026 and 10% in 2027, diverging sharply from the previous roadmap, which envisaged a steady 5% annual increase. Additionally, the CIT rate for the banking sector will rise from 19% to 30% in 2026, gradually decreasing to 23% by 2028, offset partially by a reduction in the bank asset tax. This tax is expected to bring in an extra PLN 6.5 billion to the state budget in 2026. The alcohol excise hike is projected to push inflation up by around 0.25 percentage points at the beginning of 2026, relative to previous forecasts.
• NBP: The National Bank of Poland (NBP) announced that the strong zloty could lead to a loss exceeding PLN 30 billion in 2025, assuming exchange rates remain at their end-of-June levels through the rest of the year.
• PRESIDENT: Presidential spokesman for K. Nawrocki announced that work is underway at the president’s office on a bill to permanently cut electricity prices by 33%, delivering on one of the president’s campaign promises. He added that the proposal will be unveiled in the coming weeks. Meanwhile, the president’s chief of staff, Zbigniew Bogucki, stated that the president will not approve the proposed hike in alcohol excise duties, nor the finance ministry’s plan to increase the so-called sugar tax.

A surprising surge in youth unemployment

Recent labour market data have rattled analysts. Twice in recent months, Poland’s registered unemployment rate came in sharply above consensus, unsettling observers and prompting debate. As we argued earlier, much of this jump stems from regulatory tweaks that inflated the headline figure, making the registered jobless rate a poor real-time gauge of labour-market dynamics. Alternatives are thin. Eurostat’s LFS-based unemployment rate, a more robust measure, is released only quarterly and with a notable lag; monthly estimates are an imprecise blend of the most recent LFS survey and the latest registered-unemployment data.

Still, the latest LFS releases warrant a closer look. Beneath the surface of what official statistics describe as a stagnant labour market, the survey data paint a more nuanced, and in parts worrying, picture.

A creeping upward trend

Eurostat data put Poland’s unemployment rate at 3.5% in June, up 0.2 percentage points from May. That uptick almost certainly reflects the regulatory shift that lifted the registered jobless rate by a similar margin. Because June’s Eurostat print blends Q1 LFS results with June’s registered unemployment figure, rather than Q2 LFS survey results, which are not yet available, it should be treated cautiously. A downward revision looks probable once the Q2 survey is published.

Unemployment rate (%, seasonally adjusted)

Source: Eurostat, Statistics Poland, Pekao Research

Even so, stripping out June’s noise reveals a clear upward drift. Since mid-2024, Poland’s unemployment rate has climbed 0.4 percentage points, from 2.9% to 3.3%, the fifth-largest increase in the EU. By contrast, the seasonally adjusted registered jobless rate rose only 0.2 points over the same period, hinting at a modest build-up of “hidden unemployment,” with some jobless Poles opting not to register at employment offices.

Youth bearing the brunt

More striking than the headline rise is its demographic structure. Young workers, those under 25, accounted for 40% of the increase in unemployment since mid-2024, despite making up just 6% of the labour force. Their jobless rate jumped from 10.7% in June 2024 to 14.1% in June 2025, the third-fastest increase among EU members and the sharpest rise since the pandemic shock of 2020. At this pace, Polish youth unemployment is on track to overtake the EU average.

Unemployment rate among people under 25 (%, seasonally adjusted)

Source: Eurostat, Pekao Research

Curiously, this surge is invisible in the registered-unemployment data. Young people losing their jobs are not showing up at job centres, which means the true level of youth joblessness may be even higher than current LFS estimates suggest. The more comprehensive Q2 survey, due in a month, will clarify just how severe the problem has become.

Education and industry patterns

Digging deeper, the rise in youth unemployment is concentrated among those with vocational or only basic education. That pattern points squarely to the industrial sector, where headcounts have been falling for over a year, according to enterprise data.

Unemployment rate among people under 25, by education level (%, seasonally adjusted)

Source: Eurostat, Pekao Research

Eurostat confirms the trend: manufacturing has shed the most young workers over the past 12 months. But it is not the only sector retrenching. Employment among under-25s has also contracted in transport (sensitive to industrial slowdowns), agriculture (where employment has been declining across age groups for years), and even healthcare.

Change in employment among people under 25, by industry (1Q25 vs. 1Q24, thousand y/y)

Source: Eurostat, Pekao Research

No quick fix

Youth unemployment now sits at its highest level since 2017, and its recent acceleration is striking. A meaningful reversal will almost certainly hinge on a recovery in domestic industry, a recovery that, for now, remains elusive. Until then, young jobseekers, particularly those with less experience or lower qualifications, will find opportunities scarce. Any improvement is unlikely before year-end, leaving a growing cohort of young Poles navigating a far less welcoming labour market.

Financial market update

Polish markets faced a volatile week, with WIG20 sliding to around 2,880 points as heavy selling hit the banking sector following the government’s proposal to raise the CIT rate for banks to 30% in 2026. The zloty remained stable, with EUR/PLN near 4.27 and USD/PLN around 3.64, as global dollar weakness offset local tax-related concerns. In fixed income, the 10-year yield hovered near 5.42%, with investors awaiting Wednesday’s bond switch auction and Friday’s flash CPI reading, expected to show inflation easing to 2.9% y/y, reinforcing prospects of a September rate cut. Domestic focus will also be on the draft 2026 budget and the Ministry of Finance’s September bond supply plan, both key for fiscal outlook assessment. Globally, attention remains on the US PCE inflation print and European business sentiment data, while geopolitical headlines continue to influence risk appetite. Near-term, Polish assets are likely to remain range-bound, with local data acting as the main catalyst for any breakout.