Polish manufacturing PMI down sharply in October as new orders decline

Polish manufacturing growth eased unexpectedly in October to its weakest level in two years, survey data from IHS Markit showed Wednesday. Poland's headline manufacturing Purchasing Managers' Index (PMI), fell to 50.2 in October from 52.2 in the previous month, missing expectations for a rise to 52.5.

Decline in new orders was the main reason for loss of momentum in October. The fall of the Polish PMI is actually consistent with recent manufacturing and other data, based on which consensus GDP growth forecasts had been steadily downgraded.

Details of the report showed firms raised their staffing numbers further in October, but at the slowest rate since August 2014. On the price front, input prices rose for the sixth straight month in October. Meanwhile, manufacturers cut their output prices for the fifth consecutive month.

“The latest data…represents another threat to the (previous) forecasts of expansion of Polish industry,” said IHS senior economist at Markit and author of the report, Trevor Balchin.

Deputy Development Minister Jerzy Kwiecinski tried to send out an optimistic message, reminding markets that EU fund flow will pick up in 2017, and investment growth would recover.

"The PMI is probably reflecting a realistic picture of the economy. We see EUR-PLN rising to around 4.35 over coming months. Our 3.1% growth forecast for this year is no longer sub-consensus," said Commerzbank in a report.