PMI drops below neutral level

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For the first time in 13 months, the Poland Manufacturing PMI signaled a deterioration of business conditions in July. The index, compiled by HSBC and Markit Economics, declined to 49.4 points compared to 50.3 points in June.

Any PMI reading above 50 signals improvement. If it falls below 50, worse economic conditions are expected.

New orders dropped in July, as the fastest pace since April 2013. New export orders fell at the highest pace since October 2012.

Manufacturing production growth slowed down last month, nearing stagnation. Stocks of inputs and backlogs declined sharply.

The brightest point of the survey was employment growth, highest in three months. Inflationary pressures remained subdued.

“On balance this is a very negative result pointing to further weakness in manufacturing,” said Agata Urbańska-Giner, CEE economist at HSBC. “Industrial production growth surprised to the downside in June .. and the PMI survey  points to more weakness ahead.”

“This, combined with looming deflation in the summer months, supports market pricing of interest rate cuts in Poland,” the economist added.

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