Poland's Purchasing Managers' Index (PMI) declined 0.6 points to 53.7 in April, the first easing since August, the economic research company IHS Markit said on May 4.
April still was the tenth consecutive month with the index above the 50-point line separating contraction from growth. Manufacturing business conditions remained strong in the fourth month but supply constraints and inflationary pressure intensified, IHS Markit noted.
“Supplier performance reached a new low, driving inflation of both input and output prices to new survey-record rates. Supply shortages and staff absences led to a record rise in backlogs of work, as output rose only marginally and firms sold off existing stock,” the index’s compiler said.
Companies tried to address absenteeism at work, driven by the COVID-19 (coronavirus) pandemic, by boosting recruitment in April.
“On the demand side, new orders rose only marginally despite a further strong increase in exports, suggesting weak domestic markets,” IHS Markit also said.
Analysts say that the PMI is currently reflecting the manufacturing sector’s problems in meeting demand but the problems appear to be temporary.
“Together with plans to further lift the restrictions, difficulties may become even more severe in the coming months, posing a downside risk to the rebound in global economic activity. However, that impact should be temporary,” Bank Millennium said in a comment.
“Problems should not obscure very good conditions in the manufacturing sector, which will probably improve further due to domestic factors after restrictions have been permanently lifted,” Bank Millennium added.
Later this month, Poland’s statistics office GUS will present actual industrial production data for April. The reading will be heavily distorted, however, by the extremely low base from the same month in 2020, when Poland went into full lockdown against the coronavirus.
The low base effect already influenced the March reading from Poland’s industrial segment, as growth jumped 18.9% y/y versus just 2.7% y/y in February.
Poland’s GDP surprised to the upside in 2020 with a contraction of just 2.7%. That is the worst result in three decades but still only a minor crisis compared to Italy or Spain.
The Polish economy is currently expected to expand around 3%-4% in 2021 on the back of reinvigorated household consumption, exports, and – to a smaller extent – investment.
The rising industrial prices will also fuel growth in headline inflation. Poland's statistics office GUS estimated April CPI at 4.3% y/y, 1.1pp above the official March data.