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Industrial output up by 7.7% y-o-y in May


Industrial output rose by 7.7% y-o-y in May, an acceleration compared with the previous month, according to data from the Central Statistical Office (GUS). The market had anticipated a somewhat bigger increase, in the region of 8% y-o-y.

Compared with the corresponding period of 2010, output was up in 25 (out of 34) industrial sectors. Of the main sectors, the highest growth (up by 12.4% y-o-y) was noted in mining-quarrying, followed by manufacturing (up by 8.1% y-o-y) and water supply, waste management and remediation activities (up by 7.9% y-o-y). By contrast, in electricity, gas, steam and air conditioning supply output was down by 0.2% y-o-y.

In the case of the country’s manufacturing sub-sectors, particularly strong increases occurred in other non-metallic mineral products (up by 26.8% y-o-y), furniture (up by 24.1% y-o-y) and metal products (up by 22.2% y-o-y). Double-digit growth was also recorded in basic metals (up by 18.6% y-o-y), rubber and plastic products (up by 15.7% y-o-y) or motor vehicles, trailers and semi-trailers (up by 15.4% y-o-y). On the other hand, production of computer, electronic and optical equipment slumped by 21.1% y-o-y, output in chemicals and chemical products was down by 3.4% y-o-y, while production of coke and refined petroleum products fell by 0.3% y-o-y.

In January-May industrial output grew by 8.5% y-o-y.

May was the third consecutive month that industrial output increased at a rate significantly below 10% y-o-y. The relatively modest pace of output growth observed last month was partly a result of a higher reference base, but it also reflected a weaker increase in demand, particularly external demand. Although this year May came with one more working day than a year earlier, the effect on output was limited by the fact that many Poles took this day (2 May) as an additional day off, thus prolonging their bank holiday weekend.

If one examines the performance of specific manufacturing sub-sectors, it is particularly noteworthy that output in “other non-metallic mineral products”, a sector that includes building materials, surged by 26.8% y-o-y. This reflects strong activity in the construction sector, where output jumped by 23.9% y-o-y in May, chiefly thanks to a resurgence in infrastructure projects. At the same time, the sharp output fall in the computer, electronic and optical products sector is a consequence of a very high comparative base (in May 2010 production in this sector soared by 95.4% y-o-y).

Factors such as the turmoil in the Arab countries and even more importantly the fiscal woes of the eurozone and persistent uncertainty over the strength of the global recovery, are having a dampening effect on business activity and demand. The slower rate of increase in industrial output is also a result of accelerated price growth over the past several months. In our view, although the overall situation in the industrial sector remains good, one should not expect any significant strengthening of activity here in the near future. We forecast that in the coming months the rate of industrial output growth will remain moderate but will stay above 5% y-o-y.

Paweł Sionko

Senior Economist

PMR Publications

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