Poland: Retail Sales Miss Estimates While Construction Outperforms

The industry will suffer relatively less during the second wave of Covid-19 - the government action are directed to maintain the economic situation in this sector, which is additionally supported by the still good economic data from Asia.

Construction and assembly production slightly above expectations

Data on construction and assembly production was better than expected. In October, it fell by 5.9% YoY vs. 9.8% YoY in September. The relative improvement is mainly due to smaller declines in the group of civil engineering facilities and specialized construction. The data on EU funds' disbursements shows a large jump of 37.5% YoY in 3Q20 and 6% YoY in October.

Production in this sector still remains clearly below last year's levels, although there are already optimistic signals. While in September, the seasonally-adjusted figure was at a similar level to August 2020, in October, it recorded a 1.8% m/m increase. On a monthly basis, growth continues to be recorded by companies engaged in specialized works, which may suggest an acceleration of infrastructure investment in the coming months.

What do we see in the October figures?

We already have information on the performance of key monthly hard data from the Polish economy in October. The annual growth rates of industry and retail sales were worse than in September, construction and assembly production recorded a smaller decline. However, this is already history. The second wave of the pandemic resulted in a sharp tightening of administrative restrictions and a restriction of population mobility in November. Our index aggregating this data is now more than 20 points below the October average (this is as much as two-thirds of the drop between April and March 2020 when the first wave of Covid-19 hit). In November the business climate in manufacturing, construction, trade, and services fell sharply. Our trading partners also introduced severe restrictions to sustain the next wave of Covid-19. November will bring further economic slowdown.

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