Polish Manufacturing Output Falls at Fastest Rate in Over 3 Years

September 04, 2012 /

HSBC survey data has indicated an ongoing downturn in the Polish manufacturing sector in August. Moreover, the contraction deepened, as both output and new orders declined at sharper rates. Inflationary pressures remained weak, partly linked to the stronger zloty.

Agata Urbanska, Economist, Central & Eastern Europe at HSBC, said: “The PMI index worsened in August and remained in contraction territory for the fifth consecutive month. The recovery in the previous month, which we took as a tentative sign of stabilisation, has now been followed by a broad based deterioration of all the components of the headline index.”

The headline HSBC Poland Manufacturing PMI is a composite indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.

The PMI lost most of the ground regained in July, sinking to 48.3 in August. That was the second-lowest figure in 35 months, and signalled a fifth successive overall monthly deterioration in the business climate.

Survey data indicated another fall in new business received by Polish manufacturers. New orders have declined every month since February, and the rate of contraction accelerated in August. New export orders continued to decline at a faster rate than total new business, partly reflecting the stronger zloty.

Goods production in Poland fell for the fourth month running in August, and at the fastest pace in over three years. Backlogs declined for the fifteenth month running, and at the second-fastest rate over this sequence.

The volume of inputs purchased fell for the seventh month in succession in August. The rate of decline accelerated from July, but was not quite as sharp as June’s three-year record. Firms linked lower purchasing to reduced output requirements and, correspondingly, stocks of inputs contracted for the fifth consecutive month.

The main bright point from the latest survey findings was a sustained expansion of the manufacturing sector
workforce. August marked a fifth consecutive month of job creation, although the rate of growth slowed back to a marginal pace.

Average input prices fell for the second month running in August. Prior to July, input prices had risen every month since August 2009. That said, the respective index rose for the first time in seven months, to signal a slower rate of reduction in input prices.

Output prices charged by Polish manufacturers also fell for the second month in succession in August. Firms
linked lower tariffs to competitive pressures and the strengthening zloty. The rate of reduction was
unchanged from July’s marginal pace, however.

Urbanska concluded: “Employment data from the statistical office already showed zero y-o-y growth and the trend is for further worsening. The PMI data amplifies the weakening trend observed for real activity indicators and puts increasing pressure for policy response in the face of a likely deeper than expected economic slowdown in the coming quarters.”


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