Cautious optimism in Polish manufacturing

Slight improvement in Polish manufacturing

The Polish manufacturing PMI rose from 44.8 pts in June to 45.9 pts in July, in line with market expectations and below our forecast (47.4 pts). The increase in the index was driven by higher contributions from all five sub-indices (output, new orders, employment, stocks of purchases and suppliers’ delivery times). Today’s figures support our assessment from last month that the recent declines in the PMI were temporary (see MACROpulse of 01/07/2025). Nevertheless, the index has remained below the 50-point mark separating growth from contraction for three months running.

Foreign demand holding back growth

A slower decline in total new orders and the clearing of backlogs helped slow down the pace of production drop in July. However, this was mainly due to stronger domestic demand, as the index for new export orders fell to its lowest level since August 2023. Surveyed businesses attributed this, among other factors, to weaker demand in Germany. These signals are consistent with July’s business sentiment surveys in German manufacturing (slower growth in production and orders, see MACROmap of 28/07/2025).

Polish companies remain cautiously optimistic

The future (12-month horizon) output index increased from 52.3 pts in June to 56.1 pts in July. Notably, aside from June’s reading, this was the lowest level since December 2024. According to the PMI survey, only 30% of businesses expect output to increase over the next year. Optimism is linked to the acquisition of new markets, investment and hopes for an improved supply of raw materials. Meanwhile, surveyed firms expressing pessimism cited the negative impact of the US trade policy and competition from China, consistent with our analysis pointing to the prospect of mounting pressure from Chinese imports following substantial US tariff increases on Chinese goods. Another negative signal for the outlook of Polish manufacturing comes from July’s sharper decline in employment and reduced purchasing activity among businesses (the sharpest drop in input purchases since October 2023). This suggests that companies are scaling their activity down to match a lower expected volume of orders in the coming months. The decline in the PMI between April and July, following a marked increase in Q1, indicates that the earlier growth in manufacturing activity was likely driven by accelerated exports to the US in anticipation of the tariffs announced by the D. Trump administration.

We stand by our GDP growth forecast

The PMI value in Polish manufacturing in July is lower than in Q2 (47.4 pts). Nevertheless, we stand by our forecast that Poland’s GDP growth will accelerate to 3.7% YoY in Q3, from 3.4% in Q2, and reach 3.6% for the full year 2025, up from 2.9% in 2024. Taking into account the marked improvement in Eurozone manufacturing, particularly in Germany, we expect Polish manufacturing to return to a path of growth in the coming months. In addition, rising activity in the services sector will remain a key driver of economic growth. The US decision to impose a 15% tariff on EU imports does not change our GDP growth forecast. We will cover these issues in more detail in the upcoming MACROmap.

Today’s PMI results are neutral for the PLN and yields on Polish bonds.