Poland's manufacturing purchasing managers’ index (PMI) reversed gains earned in recent months as it fell a full 2 points in October to sit at 50.2, compiler Markit announced on November 2.
The slide leaves the index at its lowest in over two years. The stagnation of Poland's manufacturing sector comes despite a strong surge in other PMI readings across Europe. Driven by a fall in new orders, the slump is bad news for an economy that has shown signs of a slowing through much of the year, especially as the PMI result in Germany - the destination for a huge chunk of exports out of CEE - rose to a 33-month high.
“[The fall reflects] a decline in incoming new business, causing output growth to slow to a fractional pace. Meanwhile, employment rose at the weakest rate in over two years and firms cut purchasing activity for the first time in three months,” Markit writes.
Even if the PMI remained above 50.0 for the twenty-fifth successive month in October, indicating an overall improvement in Polish manufacturing business conditions, the reading is “indicative of a near stagnation in the sector,” the analysts add. Next door, the Czech Republic recorded a five-month high of 53.3 for its October PMI result. Hungary recorded its highest ever reading for October at 57.0.
The main factor pulling the PMI down in October was a fall – albeit fractional – in new orders, which nearly put output to a halt. Lack of pressure from demand restricted recruitment, while employment continued to rise, but at the slowest rate since August 2014.
Poland’s industrial production has been erratic recently. In September, output rose 3.2% on the year, slowing from an expansion of 7.5% in August – the largest surge since November 2015. July, however, saw industrial production fall 3.4%.