Slight upturn in Polish manufacturing

PMI for Polish manufacturing increased to 54.7 pts in February from 54.5 pts in January, running slightly above the market consensus (54.6 pts) and our forecast (54.5 pts). The index increase resulted from higher contributions of 3 out of its 5 components (new orders, current output and inventories), while lower contributions of employment and delivery times had the opposite effect.

Supply barriers reduction in Polish manufacturing

The PMI survey has shown that delivery times in the Polish manufacturing sector have lengthened, though at the slowest pace since January 2021. At the same time, what is particularly worth noting about the structure of data is that both input and output prices were growing much more slowly; the growth we saw was the slowest since February 2021 and March 2021, respectively. It is consistent with our last month’s opinion, which said that the signs of supply barriers reduction worldwide, which could be seen in the results of business surveys for the Eurozone, US and China will soon start to show in the Polish manufacturing sector (see MACROpulse of 01/02/2022).

Strong demand supports recovery in Polish manufacturing sector

As regards the data structure, it is also worth noting a strong increase in components for total new orders, including the export orders. It indicates that the recovery in the Polish manufacturing sector is driven by a higher demand, both internal and external. The increase in the number of orders was reflected by the increase of the current output component.

Companies are optimistic about the future

Index value for the production expected in a 12-month horizon rose in February 2022. In accordance with the report, the companies surveyed are expecting the sales to keep on growing as the pandemic will be fading. Furthermore, some of them said they are ready to launch new products onto the market and make investments to increase their production capacities.

PMI survey results do not take the war in Ukraine into account

We believe that the war in Ukraine and considerable uncertainty related to it will have a negative impact on Polish manufacturing sector companies' viewpoints on the development of the situation in the future. At the same time, due to the military operations, high volatility of prices in the raw materials markets and the sanctions imposed on Russia, supply barriers may start to grow again in the months to come. This will have a negative impact on the recovery in the Polish manufacturing sector. Consequently, we believe that there is a significant downside risk to our forecast, in which Polish GDP is to grow by 4.3% YoY in 2022 vs. 5.7% in 2021. Our revised macroeconomic scenario for 2022-2023 will be presented in the next MACROmap.

In our opinion, today’s data is neutral for the PLN and the yields on Polish bonds.

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