Poland's Purchasing Managers' Index (PMI) increased 1.8 points to 50.6 in February, the economic intelligence company S&P Global said on March 3 (chart).

The increase indicates an overall improvement in business conditions in the manufacturing sector for the first time since April 2022. The uptick has analysts cautiously optimistic about 2025 in Poland’s manufacturing although there is a caveat concerning the possible slapping of trade tariffs on the EU by President Donald Trump, expected sometime this month.

The revival of domestic demand played a key role, while export orders continued to decline – although the pace of their contraction gradually slowed. The increase in orders led to higher production, but the growth remained marginal. 

At the same time, companies continued to reduce production backlogs, and after four months of declines, the level of finished goods inventories stabilised. Manufacturers' purchasing activity kept shrinking, extending the downturn in this area to a record 33 months.

Another positive sign is the increase in employment, recorded for the fourth time in the past five months. This suggests that companies anticipate a continued strengthening of the growth trend. 

Optimism was also reflected in rising prices of finished goods, which climbed at the fastest pace in two years, despite production costs declining for the fifth consecutive month. Delivery times lengthened for the eighth month in a row, though the extent of the delays remained limited.

“Beyond the headline PMI and its components were more signs of recovering confidence, as the 12-month outlook improved strongly to the second-highest in over three-and-a-half years, and manufacturers raised their output prices at the fastest rate in two years despite another decline in average input costs,” Trevor Balchin, S&P Global’s economics director, said in a statement.

Companies attributed positive forecasts to new products, rising demand, better conditions in Germany and recovering markets, S&P Global said.

"Although the pace of improvement remains moderate, rising employment, stabilising inventories and optimistic forecasts suggest the recovery could be sustained,” PKO BP said in a comment.

An additional boost for Polish industry may come from improving conditions in eurozone manufacturing, raising hopes for stronger export performance. Incoming EU funds, announced regulatory simplifications, and planned renewable energy investments are also expected to further support the sector. In the long run, the growth of the EU’s defence industry could provide a new stimulus for manufacturing.

“However, risks remain – global trade tensions, including potential US tariffs, particularly on the automotive sector, will negatively affect exporters. Additionally, a strong złoty weakens the competitiveness and profitability of Polish firms,” PKO BP also said.

In terms of actual data, Poland’s industrial sector – covering manufacturing, energy production, mining and quarrying, as well as water and waste management – disappointed in January, the latest available figures show.

Output contracted 1% year on year in the first month after increasing 0.2% y/y in December, GUS said in late February. GUS will publish February data from Poland's industrial sector in the third week of March.

Meanwhile, the producer price index (PPI) declined 0.9% y/y in January, easing the decrease rate after a revised fall of -2.7% y/y the preceding month, GUS also said.