Poland’s PMI shows increased activity in industrial sector in December

Poland’s PMI shows increased activity in industrial sector in December
By Wojciech Kosc in Warsaw January 4, 2022

Poland's Purchasing Managers' Index (PMI) grew 1.7 points to 56.1 in December, the economic research company IHS Markit said on January 3.

The index has now remained above the 50-point line separating contraction from growth for 18 months straight, indicating robust expansion in the industrial sector despite shortages in supply and elevated cost pressure, IHS Markit said.

“Underpinning this firmer performance was the strongest gains in output and new orders since July and August, respectively. Companies spoke of better demand for their goods, with competitive pricing strategies and the introduction of new goods cited as factors leading to growth in orders and subsequently production. New export orders also increased; the first time growth has been seen in four months,” IHS Markit said.

Supply-side challenges persisted in December with average lead times continuing to lengthen amid ongoing difficulties in sourcing all required production goods from vendors. On top of this, companies once again reported logistical and transportation challenges.

As in the preceding months, the mismatch of supply and demand on global product markets underpinned noticeable price pressures. 

“A wide range of raw material inputs had again risen in cost, with manufacturers also reporting higher gas and electricity prices. Inevitably this fed through to output charges, which overall increased rapidly again in December,” IHS Markit said.

That will be reflected in the December reading of Poland’s PPI, due later this month. In November, Polish factory gate prices expanded 13.2% y/y, compared to a gain of 12% y/y the preceding month.

The PPI has been accelerating since January, fuelling headline inflation. Polish CPI grew 8.7% y/y in November, adding 1pp to November’s reading, Poland’s statistical office GUS said in a flash estimate at the end of last month.

There are fears that difficulties in procuring goods and higher prices will persist in the coming months, IHS Markit said.

“This encouraged firms – wherever they could – to purchase goods to help build safety stocks. Purchasing activity rose markedly and helped to explain the sharpest rise in input inventories recorded by the survey to date,” the index’s compiler said.

The high demand and rising production requirements, encouraged firms to take on additional staff. In contrast to November’s slight fall, employment growth in the last month of the year was the best since July.

The most recent real data from Poland’s industrial sector also showed sustained expansion. 

Poland’s industrial production expanded 15.2% year-on-year at constant prices in November, after growing 7.8% y/y the preceding month, GUS said in December.

Both the PMI and industrial production readings suggest Poland is firmly on track for a GDP growth of around 5% in 2021 overall, most analysts say. 

Data

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