Poland’s manufacturing sector has experienced a notable contraction in November, as new orders declined at the most rapid pace observed in three months. This downturn has been highlighted in a recent survey conducted by S&P Global, indicating a challenging environment for manufacturers across the country.
The Purchasing Managers’ Index (PMI) for Polish manufacturing dropped to 48.9 in November, a decrease from October’s reading of 49.2. This marks the first decline in five months, with any figure below 50 signifying a contraction in economic activity.
New orders have continued to fall, with the rate of decline intensifying. This trend reflects persistent weaknesses in demand from European markets, particularly from Germany, which has been a significant trading partner for Poland. The current downturn, which began in March 2022, is now recognized as the longest contraction period in the history of the survey.
Trevor Balchin, the Economics Director at S&P Global Market Intelligence, commented on the situation, stating, “The headline Polish PMI suffered a setback in November as a sharper decline in new orders meant that manufacturers were unable to sustain October’s brief increase in output.” This observation underscores the difficulties faced by the manufacturing sector in maintaining momentum amid declining orders.
Despite these challenges, there is a silver lining in the employment figures within the sector. Employment rose for the second consecutive month, with the job creation rate reaching its highest level since February 2022. Many firms are reportedly hiring full-time staff as a strategy to enhance their production capacity, indicating a potential willingness to invest in future growth despite current market conditions.
Price pressures have also shown signs of easing. Input prices have fallen for the sixth time this year, and output prices are being reduced at the fastest rate since October 2023. Companies attribute these price reductions to intense competition and decreasing costs of raw materials, including metals and chemicals.
However, the outlook for production over the next 12 months has weakened significantly, hitting its lowest point since December 2022. Concerns regarding the broader European economy and ongoing geopolitical tensions are contributing to a decline in confidence among manufacturers.
Despite the current challenges, there are indications that the manufacturing sector in Poland may be approaching a recovery phase, as noted by Balchin. The PMI trend suggests that while the sector is facing short-term difficulties, there may be potential for rebound as conditions improve.
As the situation evolves, stakeholders in the Polish manufacturing industry will be closely monitoring these trends, assessing both the immediate impacts and the long-term implications for growth and development in the sector.
