Poland’s PMI rose 0.2 points to 52.5 in August, remaining clearly above the historical average of 50.5, IHS Markit reported on September 1. The indicator points to “solid growth” in the Polish manufacturing sector, after a fall the previous month suggested that sentiment in industry moderated.

The reading follows a steady performance from the industrial sector. Output expanded 6.2% y/y in adjusted terms, 0.5pp slower than the adjusted annual growth in June. 

“August’s round of PMI data suggests a further solid rate of Polish manufacturing growth, with the headline figure partially recovering from the eight-month low registered in July," IHS Markit’s economist Sam Teague said in a comment.

“That said, the latest figure remained below the average seen throughout 2017 so far,” Teague observed.

Overall, however, Polish PMI remains above the 50-point threshold separating stagnation from growth and has remained so for the 35th consecutive month now.

“[The] improvement in operating conditions was partly driven by expansions in output and new orders in both domestic and export markets,” Markit noted. The level of new orders from the domestic market expanded above that of new orders from abroad, the market research company also noted.

In terms of cost pressures, input and output price inflation accelerated in August. Many companies reported increasing raw material prices. Companies also passed on part of the burden of higher input costs by raising output charges at a marked rate. 

Polish manufacturers kept on hiring in August, although the rate of job creation eased to a 34-month low, as the labour market is tightening. The industry also saw a rise in work outstanding in July. That might be a harbinger of some overheating in the manufacturing sector, Polish state bank BGK suggests.

“It is too early to talk about overheating in the industry, but it is likely if the current growth rate is retained in the coming months. Demand is set to grow both domestically and abroad so one can expect rising price pressure, trouble with delivery and a further rise in demand for labour,” BGK noted.