Emerging Europe Manufacturing PMI

Emerging Europe PMI slowed to 49.2 (weighted average) in August, well below the 50.1 July average. The dichotomy in the region persisted with Russia and Turkey well below 50 and Central Europe well above 50. Central Europe average PMI fell to 52.4 in August from 54.5 in July owing to a 3.6 point drop in Poland PMI. This was surprisingly given the climb in German PMI in August. However, This is assumed to be temporary and if German PMI remains elevated and its growth expands, past experience implies this will support Central European growth, says Barclays.

The most significant development this month was the fall in Poland PMI to 51.1 from 54.5 last month. Of further concern is that the more forward-looking indicators led the decline with new orders and new export orders declining by five points each to a little over 50, the worst levels since Q3 14. As retail sales and IP decelerated in July, this adds to concerns that Poland's growth may be under pressure having sustained a recovery for over two years with steady GDP growth at around 3.5% y/y. With PMI still above 50, it is still too soon to conclude that growth will lose momentum, but evidence is starting to accumulate, argues Barclays.