Poland's Purchasing Managers' Index (PMI) climbed 2.3 points 47.3 in July (chart), the economic intelligence company S&P Global said on August 1.

The reading surprised to the upside, as the consensus assumed a drop of 0.2 points to 44.8. Still, the indicator has now lingered below the 50-point mark separating contraction from growth for 27 months in a row, the longest series since the survey began in 1998.

That said, the July expansion indicated a slower deterioration in manufacturing business conditions, S&P Global said.

“New orders, output, exports, purchasing and employment all fell further, but in each case, the rate of decline slowed since June,” S&P Global said.

“Inflationary pressures in the goods-producing sector remained subdued in July, with both price indices well below their respective long-run averages,” the index’s compiler also said.

Despite improvement, the July reading extends the waiting time for a sustained recovery in Poland’s manufacturing sector, which appears to lag the trend in the Eurozone countries, Poland’s key trade partners.

“The [July] data increase the probability that in the second half of the year, activity in industry will slowly improve, although negative risks to these expectations remain,” Bank Millennium said.

The bank’s analysts also caution that in 2024 so far, the PMI has been a rather inaccurate predictor of the manufacturing sector’s actual shape.

Poland’s industrial sector – covering manufacturing, energy production, mining and quarrying, as well as water and waste management – returned to feeble growth in June, latest available data show.

Output inched up 0.3% year on year in the sixth month after falling 1.6% y/y in May, GUS said in late June.

“Monthly industrial production data indicate that the value added in the industrial sector saw a slight increase in the second quarter. However, the average PMI index between April and June was below the neutral level of 50 points,” Bank Millennium said.

Meanwhile, the producer price index (PPI) declined 6.1% y/y in June, following a fall of 7% y/y in May, GUS also said last month.

July data from Poland's industrial sector – production and the PPI – will be published by the statistical office GUS in late August.