Polish manufacturers step up activity, February PMI shows

Polish manufacturers step up activity, February PMI shows
By Wojcich Kosc in Warsaw March 2, 2022

Poland's Purchasing Managers' Index (PMI) increased 0.2 points to 54.7 in February, the economic research company IHS Markit said on March 1.

The January reading was the 20th in a row with the index above the 50-point line separating contraction from growth. The degree of expansion in the industrial sector remained solid and the long-time hindrances of high prices and supply-side constraints turned out slightly less problematic.

“Manufacturing output increased during February for a thirteenth successive month, with growth edging up slightly. Production was again underpinned by rising new order book levels, which continued to increase on the back of firmer market demand,” IHS Markit said.

“Stronger sales to EU countries meant new export orders rose for the third month running and to the strongest degree since last August,” the index’s compiler added.

Companies still experienced constraints related to personnel shortages and supply constraints. That said, employment rose in February, as manufacturers responded to demand while delivery times of input materials lengthened at the weakest rate in more than a year.

There also were a positive trend emerging in inflation. “Overall cost inflation sank to a 12-month low. The lower rise in costs fed through to output charges, which also rose strongly, but at a noticeably softer pace,” IHS Market also said. 

Trends outlined in the PMI survey will be reflected in the February readings based on real data from the industrial sector. The PPI is expected to continue growing fast after surging 14.8% y/y in January, compared to 14.4% y/y the preceding month.

The PPI has been accelerating since January, fuelling headline inflation. Polish CPI grew 9.2% y/y in January, adding 0.6pp to December’s reading.

Poland’s industrial production boomed 19.2% y/y in January, after growing 16.7% y/y the preceding month.

Both the PMI and industrial production readings suggest Poland’s economy could be in for a strong start to 2022 after a very good fourth quarter data. The war in Ukraine, however, may well lead to revision of that outlook. 

Poland’s GDP expanded 5.7% in 2021.