Poland's Purchasing Managers' Index (PMI) grew 4.5 points to 48.7 in November (chart), the economic intelligence company S&P Global said on November 2.

The indicator has lingered below the 50-point mark separating contraction from growth for 19 consecutive months now. But the sharp rise – the biggest in the 25-year history of the survey, excluding the pandemic-influenced volatility – could foreshadow the end of the downturn as soon as December.

“The momentum strongly suggests a return to growth territory in December,” Trevor Balchin, economics director at S&P Global, said in a statement.

That would come on the back of “a near-stabilisation of demand conditions in November,” S&P Global said. 

New orders were down for the twenty-first successive month – the second-longest period of decline in the survey history – but the rate of contraction slowed to the weakest over this sequence. 

Production fell for the nineteenth month running in November but, with inflows of new work approaching stability, the rate of decline slowed notably to one of the weakest in the current downturn. 

Reduced output partly reflected a further build-up of unsold stock, as inventories of finished goods rose for the second month running and at the fastest rate since July 2022. 

The much weaker drop in new orders was reflected in the latest data on capacity pressures. Backlogs of work were reduced in the eighteenth successive month but at the slowest rate over this period. The same trend was evident in the volume of inputs purchased by manufacturers. 

Reflecting weaker declines in new and outstanding business, the rate of reduction in employment was the slowest since June, S&P Global noted.

Suppliers' delivery times lengthened for the first time in seven months, and average input prices rose for the first time in eight months. Polish manufacturers continued to reduce their prices to stimulate demand. Charges fell for the eighth month running, the joint-longest sequence of discounting in over eight years.

The PMI pricing section is in line with the most recent PPI data from Poland’s statistical office GUS, which indicated an ongoing deflation in factory gate prices at -4.1% y/y in October.

“The data suggest that the improvement in the industrial sector in Q4 is beginning to accelerate more noticeably,” Bank Millennium said.

“We believe this is primarily due to factors related to domestic consumer demand, which grew much faster in Q3 than the long-term average. This was driven by a decline in inflation, a return to real wage growth, a favourable labour market, and improving consumer sentiment,” Bank Millennium added.

The most recent actual data from Poland’s industrial sector – covering manufacturing, energy production, mining and quarrying, as well as water and waste management – saw output expand 1.6% y/y in October after a revised fall of 3.3% y/y the preceding month.

November industrial production and PPI data from GUS are due in the second half of November.