The PMI index for Polish industry in November 2024 was 48.9 points, S&P Global reported. The index also recorded its first decline in five months. “Forecasts for the next 12 months have deteriorated significantly,” analysts said.
The PMI index is a leading indicator. Its task is to forecast the future state of industry or services before real data, e.g. on industrial production or retail sales, reach the market. An index value above 50 points means recovery in the sector, and below – a contraction of the industry.
“The latest results of PMI research conducted by S&P Global signaled a further overall deterioration in economic conditions in the Polish manufacturing sector in November. The fastest decline in new orders in three months caused production to shrink again. An accelerated decline in new orders and a renewed decline in production caused the main PMI index to decline for the first time in five months,” we read in the statement.
Poland's PMI. Worse prognosis
Analysts pointed out that “forecasts for the next 12 months have deteriorated significantly – business optimism fell to its lowest level in almost two years due to concerns about the weak European economy and geopolitical tensions.
In November, the Polish PMI fell for the first time in five months (November: 48.9, October: 49.2).
Experts pointed out that “three of the five sub-indices that make up the main indicator had a negative impact on it – production, new orders and stocks of purchased items, which was partially offset by the positive impact of employment indicators and delivery times.”
Fewer orders in industry
“Despite this, the latest PMI reading was almost the highest (only in one month it was higher) in the 31-month sequence of readings below the 50.0 threshold, which began in May 2022. In November, the number of new orders coming to Polish manufacturers dropped sharply again “The pace of decline registered the highest value in three months, extending the record-breaking downward trend since March 2022,” we read.
Analysts noted that new export orders fell again and companies raised concerns about weakening European demand, in particular the German economy.
“October's increase in production proved short-lived, with November data again showing a decline. Over the past 33 months, production has fallen 31 times, although the latest decline was modest. Production in November was partially supported by a further reduction in the level of unfulfilled orders. Inventories of finished goods declined for a second month in a row, although only slightly. According to November survey results, Polish producers' forecasts for the next 12 months deteriorated. Companies expressed concerns about the condition of the European economy and geopolitical tensions. that production will increase, but the degree of optimism was the lowest since December 2022. – reported the authors of the study.
There are also positive conclusions
Experts emphasized that the main positive conclusion from the latest study was the further increase in employment in industry, and the number of employees increased for the second month in a row, after the longest sequence of layoffs since 2004.
“Unofficial data suggested that companies were aiming to increase production capacity while recruiting full-time workers. The pace of new job creation increased to the highest level since February 2022. November data signaled a clear weakening of price pressure. Average prices of inputs fell after for the sixth time since the beginning of 2024, and at the fastest pace since October 2023.” – indicated the authors of the study.
“Meanwhile, prices for manufactured goods fell at the sharpest pace over the same period. Companies saw intense price competition and lower prices for raw materials, including metals, chemicals and wood. As demand for manufactured goods continued to contract in November, purchasing activity decreased again, extending the current record period of continuous decline to two and a half years. The pace of decline, although faster than in October, was still among the weakest in the current sequence in a row, although only slightly. Inventories decreased by the most in half a year,” we read in the study.
About the PMI index
According to S&P Global, the Polish industrial sector is based on data prepared by S&P Global based on monthly responses to questionnaires sent to management staff in over 200 manufacturing companies. The group of respondents is determined based on the industry's share in GDP and employment level. The research was conducted in June 1998.
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