In April, there was a fairly marked improvement in business conditions in the manufacturing sector. The IRG SGH industrial confidence indicator (IRGIND) rose by 5.4 pts month-over-month. This increase is primarily due to the expected rise in production volumes in the coming months, as well as an increase in domestic orders. The IRGIND currently stands at 2.2 pts (the highest level since August 2025), 5.5 pts higher than a year ago.
The results of the April survey reflect heightened optimism regarding the industry’s growth prospects in the near term – the forecast balances are significantly higher than the current balances. The effects of rising fuel prices are also evident – after many months of stable assessments and inflation expectations, manufacturers sharply raised the prices of goods sold (a 10-pts increase in the balance) and expect further increases. A sharp decline in capacity utilization is striking (by as much as 14 percentage points over the quarter, 6.7 percentage points less than a year ago), alongside a strong increase in investment, particularly in machinery and equipment (by 14.7 percentage points over the half-year and even more, by 17.6 percentage points, year-on-year). According to the respondents, the burden of barriers to business activity has increased significantly. Particularly acute is the shortage of raw materials and supplies resulting from supply chain disruptions (an increase in the percentage of respondents pointing to these issues from 35.9% in January to 65.1% in April) and the decline in foreign demand (an increase of 19.7 percentage points in the share of respondents reporting insufficient foreign demand), which is further confirmed by a decrease in the balance of export orders (by 10.3 points compared to March).
In short, the manufacturing sector has entered a phase of spring recovery, which is likely to continue into May. Despite manufacturers’ optimism, however, it is hard to see any signs of a sustained economic expansion. The manufacturing sector is heavily dependent on conditions in foreign markets, where there is neither an improvement nor any signs of such an upturn on the horizon.
Researcher:
Konrad Walczyk, kwalcz1@sgh.waw.pl