What's Next for Industry in Europe? Investors See Signs of Stabilization in Poland

In September 2025, the PMI index for Polish industry rose to 48,0 points, which indicates a clear stabilization and improvement after the previous declinesAlthough the figure is still below the 50-point threshold that separates expansion from contraction in the sector, it is the highest since April of this year, and the rate of decline in industrial activity has slowed significantly. Compared to August, when the PMI was 46,6, September's improvement may herald a coming rebound, although a full recovery is likely not expected until 2026.

A signal indicating a recovery in demand

A detailed analysis of the PMI components shows that production and new order inflows continue to decline, but at a much slower pace, suggesting market stabilization. It's worth noting the increase in production backlogs for the second time in over three years, which may indicate that companies are beginning to more intensively fulfill orders and gradually clear the backlog. This is a positive sign pointing to a recovery in demand and a potential increase in production in the coming months. Employment in the sector remains unchanged, which is important for maintaining competences and readiness for developmentAdditionally, inflationary pressures in the industry are easing, production costs are falling, and final product prices are decreasing, which may positively impact margins and the competitiveness of producers.

In German industry, Poland's key trading partner, the situation is more mixed, but the two countries' economic trends are beginning to converge. The German manufacturing PMI reached 49,5 points in September, exceeding expectations and indicating near-stable activity in the sector. Production there has been increasing for the seventh consecutive month, although a decline in new orders and job cuts highlight the challenges facing the industry. Meanwhile, in France, the PMI fell to 48,2 points from 50,4 in August, marking a return to the phase of industrial contractionThis is a worrying sign that could indicate problems with competitiveness and external demand, negatively impacting the entire eurozone. Across the eurozone, the PMI fell to 49,8 points, signaling a return to contraction in industrial activity after a period of slight recovery. The decline in new orders, especially export orders, and the weakening employment indicate continued economic difficulties in the region.

The sector is close to rebounding

The outlook for Polish industry in the coming months is moderately positive. The stabilization of the PMI and a slowdown in the pace of decline suggest the sector is close to a rebound. This is primarily due to the improvement in global supply chains, which have been severely disrupted recently but are gradually returning to normal, enabling better planning and order fulfillment.Decreasing cost pressures thanks to lower raw material and energy prices improve business profitability and create favorable conditions for investment. Stabilizing domestic demand, both from consumers and businesses, could contribute to an increase in industrial orders.

However, challenges remain. These include, above all, geopolitical uncertainties that could impact access to raw materials and the functioning of supply chains, as well as a possible global economic slowdown that would reduce export demand. In the European context, the situation is more uneven. German industry, despite signs of stabilization, is struggling with lower export demand and structural challenges that could hinder the region's recovery.In France, however, industry is in a contraction phase, which could weigh on the entire eurozone economy. Consequently, if the situation in the eurozone does not improve, Poland's export prospects could be limited.

Polish industry faces numerous challenges, but it also has a real chance of recovery in the coming quarters, especially if costs and demand remain stable. Support from economic policy and investments will also be crucial, helping companies increase their innovation and competitiveness in foreign markets.

September PMI results had a positive impact on the sentiment on the Polish capital market. These data supported today's gains on the stock market, which can be interpreted as a partial return of positive sentiment after several weaker daysInvestors are seeing signs of stabilization in the industrial sector, which translates into more optimistic assessments of Poland's short- and medium-term economic prospects.

Source: Mikołaj Sobierajski, XTB