Polish industry’s recovery continues sluggishly in September

Polish industry’s recovery continues sluggishly in September
By bne IntelliNews October 2, 2020

Poland's Purchasing Managers' Index (PMI) inched up 0.2 points to 50.8 in September, the economic research company IHS Markit reported on October 1.

The September reading keeps the index just above the 50-point line separating contraction from growth, but the rebound that began in July is fading.

“The marginal uptick in the PMI compared with August reflected the employment, new orders and stocks of purchases components [boosting] the headline figure. This was partly offset by slightly negative directional influences from suppliers’ delivery times and output, although the latter sub-index continued to signal overall growth,” IHS Markit said. 

Cost inflationary pressures remained strong in September, partly reflecting zloty weakness, IHS Markit also said. Input price inflation eased since August but remained above the long-run survey average. Output prices rose for the first time in six months, albeit modestly.

The outlook for Poland’s manufacturing sector remains uncertain. 

“With [coronavirus] cases rising again across Europe and new restrictions being imposed as we head towards winter, the fourth quarter of 2020 is looking weak even though the 12-month outlook has picked up,” IHS Markit’s economics director Trevor Balchin said in a comment.

Poland has been going through a surge in new coronavirus (COVID-19) cases recently, with the daily tally climbing to a record high of 1,967 on October 1. The country reopened schools in September and many restrictions have been lifted since June.

Current forecasts for the Polish economy are of a recession of around -4% in 2020, an unprecedented downturn in one of Europe’s tiger economies but still only a nuisance compared to the crises in Italy or Spain. The Polish economy is also expected to stage a rebound of around 4% in 2021.

But with the number of new coronavirus cases increasing fast, the government has returned to the discussion of bringing some restrictions back. The second wave of the pandemic could rewrite expectations for Polish growth in 2020.

Meanwhile, Poland's industrial production growth accelerated by 0.4pp to 1.5% y/y in August (+1.6pp to 1.8% y/y following adjustment), the latest monthly data showed in late September. The September reading is due later this month.