Business sentiment indicator for Polish manufacturing (PMI) rose to 55.0 pts in December vs. 54.2 pts in November, running above market expectations (54.7 pts) and our forecast (54.0 pts). Therefore, it has reached the highest level since February 2015. An increase in PMI index in December resulted from higher contributions of 3 out of its 5 components (for output, employment and new orders). An opposite impact came from lower contributions of subindices for suppliers' delivery times and stocks of purchases. In the whole Q4 2017 PMI index for Polish manufacturing amounted to 54.2 pts vs. 52.8 pts in Q3. It poses an upward risk to our forecast of GDP growth rate in Q4 2017 (4.8% YoY vs. 4.9% in Q3).

Especially noteworthy in the data structure is an increase in output subindex (56.9 pts in December vs. 55.3 pts. in November). Growing capacity utilization supported a rise in employment subindex (52.0 pts in December vs. 50.4 pts. in November). We expect that in the coming months the increase in employment will be more and more limited by growing difficulties of companies in finding skilled labour. It would be a factor conducive to higher investments in order to implement less labour-intensive production methods, and therefore increase labour productivity. Supportive to our scenario is today's press release published together with the data, which indicate that one of the sources of improvement in business sentiment in Polish manufacturing are "investments in more efficient equipment”.

Growth was recorded also in case of new orders subindex (56.0 pts in December vs. 55.4 pts in November) which was accompanied by a slight decrease in subindex for new export orders (53.8 pts. vs. 53.9 pts.). It signals that the source of higher pace of orders' growth in Polish manufacturing was domestic demand. A slight drop in new export orders subindex was surprising as PMI index for German manufacturing was record high in December. Nevertheless, it can be expected that the improving situation in German manufacturing will support demand for goods manufactured in Poland and used in the production of final products.

Today's data are slightly positive for PLN and yields on Polish bonds.

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