Poland's Purchasing Managers' Index (PMI) fell 0.7 points to 48.2 in December, the economic intelligence company S&P Global said on January 3 (chart).

The fall of the indicator – which has now lingered below the 50-point mark separating contraction from growth for 32 months – occurred for a second successive month after a four-month expansion series, which fuelled hopes that the longest manufacturing downturn on record was about to end.

That said, “a closer inspection of the sub-indices provides some cause for optimism moving into 2025,” Trevor Balchin, S&P Global’s economics director, said in a statement.

“The downward movement in the PMI was mainly driven by faster declines in output and input inventories, but data on new orders and finished goods stocks suggest that firms may revive production in the coming months as demand moves closer to stabilisation and they need to restore warehouse levels,” Balchin also said.

Domestic demand also appeared to be recovering in December, as total new work fell at the slowest rate in over a year despite a faster decline in exports while employment rose for the third month running, suggesting manufacturers are gearing up for higher output, according to S&P Global.

“We assume that domestic demand, supported by the inflow of funds from the National Recovery Plan [money from the EU’s pandemic recovery fund] as well as regular EU funds, will be the main driving force for industrial activity in 2025,” PKO BP said in a comment.

For that to materialise, new orders will have to increase - which is yet to happen, 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 November, the latest available figures show.

Output retreated 1.5% year on year in the eleventh month after a revised increase of 4.6% y/y in October, GUS said in late December.

“The industrial sector continues to neither collapse – as its German counterpart has – nor exhibit the type of expansion seen in previous economic cycles,” Santander Bank Polska said at the time.

“We expect that in 2025, a combination of still decent domestic consumption growth and a recovery in the construction sector driven by EU funds will enable positive growth in production volumes,” it also said.

GUS will publish December data from Poland's industrial sector in the third week of January.

Meanwhile, the producer price index (PPI) declined 3.7% y/y in November, easing the decrease rate after a fall of 5.1% y/y the preceding month, GUS also said.