Industrial output falls 1.1% in August, but recovery trend remains positive

According to data presented yesterday by the Central Statistical Office (GUS), industrial output fell in August reflecting the unevenness of the economic recovery from the worst slowdown in a decade. Industrial output, without adjustment for seasonal factors, fell by 1.1% in August compared with a year earlier, against the general expectation of no significant change, and following a revised 5.7% gain in July. Analysts said that, taking into account the shorter working month, the industrial output figures represented a modest year-on-year gain. But weak production activity continued to support the case for further cuts in interest rates, which at eight percent are nearly seven percentage points above retail inflation, which hit 1.2% in August. "If you strip out the effect of fewer working days, output is still increasing. But we had strong exports in July, and my suspicion is that they fell a little in August," said Gavin Gray, an economist at HSBC in London. The Monetary Policy Council (RPP) will meet on September 24-25, and uncertainty over the fiscal outlook may stand in the way of another interest rate cut. "I think one could say that from the output side there are no impediments to further cuts," said Gray. (Reuters, Rzeczpospolita, pp. A1, B1) M.M.