Polish PMI falls slightly in October but manufacturing remains on solid footing

Polish PMI falls slightly in October but manufacturing remains on solid footing
Poland’s PMI fell 0.3 points to 53.4 in October but remained above the 50-point stagnation threshold for the third consecutive year
By bne IntelliNews November 2, 2017

Poland’s PMI fell 0.3 points to 53.4 in October, IHS Markit reported on November 2.

The fall is an insignificant dip overall as the Polish manufacturing segment continues to enjoy a strong improvement in business conditions at the onset of the fourth quarter, IHS Markit notes.

New order growth came in strong in October, as did the increase in the sector’s output. On the downside, however, there are backlogs rising at a rate that outpaces the rate of growth in manufacturing jobs. Inflationary pressures are on the rise as well, with purchase prices growing at the fastest rate since March and output charges increasing at the second-fastest rate in over six years.

The reading follows a somewhat weakened, but still solid, performance from the industrial sector in September. Output expanded 6.9% y/y in adjusted terms in the ninth month period, 1.2pp slower than the adjusted annual growth in August. The data for October is due later this month. 

“Poland’s manufacturers started the fourth quarter on a solid footing. Moreover, with new order growth unchanged from September’s two-and-a-half year high, the sector looks set to maintain this momentum towards the end of 2017," IHS Markit’s economics director Trevor Balchin said in a comment.

Polish PMI has now remained above the 50-point threshold separating stagnation from growth for over three years straight now, the longest sequence of unbroken positive readings since the survey began in 1998.

“The downward movement in the PMI in October reflected a slightly slower output growth, a fall in stocks of purchases and a less marked lengthening of supplier delivery times,” IHM Markit noted.

On the positive side, last month’s worry of stagnating employment appears to have lessened, at least for now, after employment grew again in October, returning to the growth trend that dominated the last four years, with the exception of September.