Poland's Purchasing Managers' Index (PMI) fell 0.3 points to 48.9 in November, the economic intelligence company S&P Global said on December 4 (chart).

The fall of the indicator – which has now lingered below the 50-point mark separating contraction from growth for 31 months – also marks the end of a four-month expansion series, which fuelled hopes that the longest manufacturing downturn on record was about to end.

“The November PMI data present a complex picture of the economic situation in Poland's manufacturing sector. The decline in new orders and production continues to highlight significant challenges, such as weakening demand in Europe and persistent geopolitical uncertainty,” PKO BP said in a comment.

The November fall came on the back of faster drops in new orders and output, S&P Global noted. On the positive side, there was an increase in employment, as the workforce expanded for the second month running, following the longest sequence of job reductions in two decades, S&P Global said.

Elsewhere, “November data signalled a notable weakening of price pressures. Average input prices fell for the sixth time in 2024 so far, and at the fastest rate since October 2023,” S&P Global said. 

“Meanwhile, output prices were cut at the sharpest rate over the same period. Companies reported intense price competition and lower raw material prices, including metals, chemicals and wood. With demand for manufactured goods continuing to contract in November, purchasing activity fell again, extending the current survey-record downturn to two-and-a-half years,” the index’s compiler also said. 

Despite the November contraction of the index – slight as it was – the recent stability of the index still offers grounds for optimism, according to PKO BP.

“The stabilisation of the PMI and the reported increase in employment may indicate a gradual transition into a recovery phase. The potential expansion of production capacity could signal future growth in industrial activity,” PKO BP said.

"Additionally, the easing of inflationary pressures is a significant factor supporting improved competitiveness for Polish manufacturers,” PKO BP also said.

According to S&P Global, however, the 12-month outlook “deteriorated notably, with confidence at its lowest in nearly two years on concerns over the weak European economy and geopolitical tensions”.

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 October, the latest available figures show.

Output grew 4.7% year on year in the tenth month after a revised decline of 0.4% y/y in September, GUS said in late November.

“The recovery in the industrial sector is beginning to take shape, although the main hopes are tied to 2025. This is partly due to delayed and weakened growth of activity in the European industrial sector,” ING said at the time.

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

Meanwhile, the producer price index (PPI) declined 5.2% y/y in October, deepening the decrease rate after a fall of 6.2% y/y the preceding month, GUS also said.

The PMI data are neutral from the standpoint of the National Bank of Poland’s monetary policy outlook.

“In our view, the resumption of rate cuts in Poland could occur in the second quarter of 2025. However, a deepening of negative trends in the economy, particularly in the labour market, could prompt a shift towards implementing cuts as early as March,” Bank Millennium said.