Poland’s industrial output growth and producer prices likely to have accelerated in June

Poland’s industrial output growth is likely to have accelerated in the month of June. According to a Societe Generale research report, the industrial output is expected to have grown 4.7 percent on annual basis in June, as compared with May’s growth of 3.5 percent year-on-year. the 3.8 percent year-on-year rise in manufacturing and 2.5 percent growth in water supply mainly drove the increase in Poland’s industrial output.

The PMI of Poland fell slightly in July to 51.8 from 52.1 in June; however, growth of new orders remained at the highest level in three months and four out of five sub-indices were more than 50 points. Car production rose 23.9 percent year-on-year last month, as compared with May’s decline of 1.1 percent year-on-year. This represents a risk on the upside to the projection, according to Societe Generale.

Meanwhile, producer price growth is likely to have dropped to -1 percent on annual basis in June from -0.7 percent in May. On month-on-month terms, the producer price grew 0.3 percent, owing to the 6.6 percent monthly rise in Brent oil in June and further weakening of the Polish zloty, stated Societe Generale.

Within the components, manufacturing prices are likely to have risen 0.4 percent month-on-month, whereas mining prices are expected to have dropped 0.3 percent on sequential terms. There is possibility that the PPI would move back above zero in the fourth quarter of 2016 if commodity prices, particularly Brent oil, continue to rise. In the mean time, the upcoming retail sales data for June is expected to report an increase.

“We estimate that retail sales growth increased to 3.3 percent yoy in June from 2.2 percent yoy in May, while in monthly terms it is likely that there was growth of 2.0 percent”, added Societe Generale.

The annual rise of 8.8 percent in motor vehicles sales, 4.5 percent growth in food and beverage sales and 14 percent rise in retail sales in non-specialized stores are expected to have mainly driven the headline print. In real terms, retail sales are likely to have grown 5.3 percent year-on-year.