Surprising activity slump in Polish manufacturing
Polish manufacturing PMI went down from 47.1 pts in May to 44.8 pts in June, thereby printing markedly below the market expectations (48.0 pts) and our forecast (49.5 pts). This means that it reached the lowest level since October 2023. Consequently, the index has remained below the 50-point mark separating growth from contraction for the second month running. The data is highly surprising, not just because of the direction of the change, given the upturn seen by Poland’s main trade partners over the last couple of months (see MACROmap of 30/06/2025), but also due to the depth of the fall itself (the drop of the PMI over the last two months is actually comparable to that seen after the outbreak of the war in Ukraine).
New orders no longer coming in
What pushed the index down was weaker contributions of 3 out of its 5 components (current output, new orders and inventories), while a higher contribution of employment and delivery times had the opposite effect. Particularly noteworthy was the decline in new orders, which was accompanied by a strong drop of the new export orders sub-index, which fell to the lowest level since September 2023. The surveyed companies cited adverse conditions in European markets as one of the reasons behind it. It is worth noting that it was not long ago (last March) that we could see the strongest growth in orders in the Polish manufacturing sector since the outbreak of the war in Ukraine. Amidst the decline in new orders, the enterprises significantly accelerated efforts to catch up on production backlogs. This, however, did not stop production from declining: last June, it reached the lowest level since November 2022.
Polish manufacturing losing faith in recovery
The index measuring production expected in a 12-month horizon fell in June, but still remains above the 50-point mark. It is worth noting, though, that the scale of the drop is massive, given the index peak recorded last March. Such a strong downward adjustment of expectations over a three-month period has only been seen once in the recorded history of the index measuring production expected in a 12-month horizon in Polish manufacturing (i.e. since April 2012): right after the outbreak of the pandemic. In our view, this means that the enterprises operating in the Polish manufacturing sector are losing faith in the lasting nature of the recovery seen over the last couple of months. The authors of the PMI survey have named the high level of uncertainty connected with tariffs and global tensions as one of the reasons behind it. Reduced optimism, in turn, is mirrored by a strong reduction of inventories of both intermediate and final goods. This shows that the scale of activity is being adjusted to the level of new orders in the coming months, which is expected to be lower.
Is it actually the end of the recovery in Polish manufacturing?
Taking into consideration the data released over the past two months, one could think that signs of recovery in Polish manufacturing were misleading. However, bearing in mind a marked improvement in the manufacturing sector in the Eurozone, we believe that Polish manufacturing sector will get back to the growth trajectory in the months to come. Our conclusion is underpinned by the strong synchronisation of business cycles between Poland and the common currency area. One source of this synchronisation is Poland’s deep integration with the Eurozone through international value chains, reflected in the high intensity of intra-industry trade (see MACROmap of 16/12/2024).
Our GDP growth forecast remains unchanged
For this reason, we have made no adjustments to our forecast of Polish GDP going up to 3.4% YoY in Q2, from 3.2% in Q1, and to 3.6% in 2025, from 2.9% in 2024 despite the average Polish manufacturing PMI declining from 50.0 pts in Q1 to 47.4 pts in Q2.
Today’s markedly-weaker-than-expected data is slightly negative for the PLN and yields on Polish bonds.
