Polish industry is a little better, but still at stake.

The PMI index for the Polish industry rose slightly, but remains “negative”. On a scale of 50, it means a neutral result, and anything above is an uptrend, and below 50, the sector is slowing down. The September purchasing managers’ index PMI showed 43 points. A month ago it was even worse. In August, reading showed 40.9 points. The light in the tunnel may be the fact that the September data pleasantly surprised analysts who had predicted it would reach only 40.1%, ie. will be lower than last month.

“In September, the Polish industrial sector continued to shrink. Economic conditions have been unfavorable for manufacturers, as evidenced by another sharp decline in production and new orders. Inflationary pressures were still notable (production costs rose at the fastest pace in three months) and business optimism remained low. The pace of job cuts in Polish factories has also accelerated.” - read in the ad.

Industrial orders continue to fall

New bookings have been falling for the seventh month in a row, according to the latest research. The rate of decline slowed down from August’s 27-month high, but was still strong. Companies surveyed reported poor market conditions due to uncertainty and fiscal pressures caused by high inflation. For similar reasons, exports also weakened - the demand for Polish goods fell mainly in Germany.

“Another drop in sales was reflected in production volumes, which fell for the fifth month in a row in September. The rate of decline, although slowing to its lowest level since May, was still high. In response to the downward trend in sales and production, companies reduced purchasing activity while trying to use existing stocks, which contributed to the release of working capital. - read on.

Forecast moderate

In September, Polish producers’ forecasts for production growth in the next 12 months were moderate. Concerns about a further drop in sales and continued high inflation undermined the business optimism of entrepreneurs. According to the surveyed companies, the main drivers of inflation were energy, unfavorable exchange rates and shortages of raw materials (especially electronics). The reaction of manufacturers to the current situation was a sharp increase in prices for finished products (however, the growth rate of prices for industrial products in September was the slowest since the beginning of 2021), the report notes.

“High prices and increasingly uncertain macroeconomic conditions over the winter have weighed heavily on employment decisions. Job losses have intensified and the number of jobs in the sector has declined for the fourth month in a row, the most since May 2020.” - also written.

Commenting on the results of the latest research, Paul Smith, an economist at S&P Global Market Intelligence, said that uncertainty in the economy today is a common problem not only in the markets, but also among manufacturers themselves.

“Business optimism is still low and companies are cutting jobs faster and faster to better control costs amid high inflationary pressures. Of particular concern to companies will be the re-acceleration of production cost inflation, which rose in September for the first time since March, along with rising energy prices. wrote Smith, quoted in the press release.

An index value above 50 points means an increase in manufacturing activity, and below this threshold - a decrease in activity.