Industrial and construction output (weighted average, % qoq, s.a.)

Source: Macrobond, GUS, Pekao Research

Industrial production rose by 7.6% yoy in June, slightly above the consensus estimate but below our overly optimistic forecast. The acceleration in production is primarily due to favorable calendar effects – the difference in working days shifted from -1 to +1 yoy – as production did not gain any additional momentum in June. After adjusting for seasonal and calendar factors, industrial production remained virtually unchanged (+0.1% mom). The production details this time are interesting and cast the overall reading in a slightly less favorable light – mining output continued to grow at a very high rate (+28% yoy; we wrote about this last month), while manufacturing output disappointed (+6.4% yoy). We will refer once again to last month’s comment, as the structure of output growth remains similar – at the top of the list of the fastest-growing sectors are, among others, the production of other transportation equipment and electrical equipment.

Manufacturing output in hard and soft data

Source: Macrobond, GUS, Pekao Research

A few months after the outbreak of the Gulf War, we can conclude that Polish industry has, for all intents and purposes, not been affected by it. Production has been steadily accelerating in recent months, primarily due to two factors:

• Investment demand, reflected both in higher production of capital goods and in construction-related industries.
• A cyclical recovery in European industry, which is boosting the performance of domestic exports and export-oriented sectors.

Construction output rose by 5.1% yoy in June, following a 3.8% yoy increase in May. The June growth rate for construction output is not impressive, but it is the best result since December 2023. June was also the month in which construction output recovered from the slump caused by the harsh winter – it is slightly higher than in December of last year and 4% higher than the previous year’s average. Regardless of how we define our point of reference, however, this is a worse result than in 2010. The recovery in construction is a fact, but its pace is somewhat disappointing. In a few days – when the Statistics Poland (GUS) publishes detailed data for the second quarter – we’ll know more about the reasons behind this. We suspect that the biggest drag continues to be residential construction (a slight increase in new construction starts in previous quarters) and perhaps also road construction.

Construction output (2015 = 100, s.a.)

Source: Macrobond, GUS, Pekao Research

The construction sector accounts for the largest share of capital expenditures in the economy, but investments do not end there. We believe that demand in other areas (machinery, transportation equipment, software) is strong enough to ensure solid growth in total investment. We expect investment to grow by 6-7% in 2026–27.