Industrial output is on a high

Polish seasonally adjusted industrial output in July rose by 7.8% y/y. In the picture: laboratory of high and extremal tensions in Tele-Fonika Kable S.A. (power cable factory), Bydgoszcz. Tytus Żmijewski/PAP

Poland’s industrial production went up by 10.3 per cent in July compared with the same month last year, the country’s Central Statistical Office (GUS) said on Monday.

The stats are an improvement on the projected increase of 9.7 per cent, having only fallen 5.4 per cent on the month before, instead of the projected 5.7 per cent.

Poland's construction continues to be strong with a 18.7 per cent year on year increase, though it fell from 24.7 per cent year on year growth in June.

Prices of land for development in Poland are soaring with places such as Warsaw and Tricity seeing a 50 per cent increase since 2015.

The recent boom in the real estate market has led to a shortage of land for development which, coupled with the increasing cost of construction plots, has sent apartment prices spiralling.

On top of this, labour and material costs have also increased, mainly due to the accumulation of major infrastructure projects, which – being co-financed by the EU have to be completed and cleared by the end of 2022.

BZ WBK economist Grzegorz Ogonek said: “The industrial output itself is also a very positive signal for us, although it diverges from the forecasts to a much smaller degree. One should also take a look at this data that GUS clears of the seasonal factors, and there, the growth is at 7.8% y/y, the highest reading since October.

“Apparently, as far as the construction is concerned, limitations on the side of output capacities, resulting from labour shortage, have surfaced,” Ogonek said.

“We know that this factor should manifest itself somehow in the readings, especially given the fact that construction prints have been very strong for a long time.”

He added: “Let us also remember that as recently as several months ago, we had doubts as to whether the economy in the Eurozone lost its luster, or whether it was faced with temporary distortions. . . . It seems that this is some sort of proof that Europe has not entered economic stagnation, and those several weaker readings from the beginning of the year did not point to a slowdown. . . . For us, this is a good sign.

“It is being said that the second half of the year will be marked by a gradual deceleration of the economic growth in Poland. It seems that we are free to stress the word "gradual" here - today's data does not indicate that we will be faced with a clear deceleration at the onset of the year's second half.”