Poland: Manufacturing sector dives at sharpest pace since mid-2009 in October
The manufacturing Purchasing Managers’ Index (PMI), released by IHS Markit, slumped to 45.6 points in October (September: 47.8 points), marking the worst reading since June 2009. The index thus moved further below the 50-threshold that separates contraction from expansion in the manufacturing sector, below which it has been since November 2018.
October’s deterioration was underpinned by steeper declines in output, new orders and employment. Both output and new orders have contracted for a whole year now, and in October they did it at a faster pace than in the previous month—their pace of contraction was the fastest in over ten years. Lower domestic and external demand continued to be behind the decline, with orders from abroad dragged down by faltering demand from the European market and strong competition from China. Meanwhile, businesses’ expectations on production fell to a new record-low due to the wider European economic slowdown, and firms reduced backlogs at a sharp pace. To conclude, input inflation slowed to a three-year low amid falling metal prices, while output prices declined for the first time in three years.
Trevor Balchin, Economics Director at HIS Markit, commented:
“October was a dire month for Polish manufacturing. […] Worryingly, the downturn looks set to continue into 2020 as the forward-looking Future Output Index sank to a new record low since it was first compiled in 2012.”