The Purchasing Managers’ Confidence Index (WWK) increased by 1.7pts in July
12:03
The Confidence Index (WWK), which gauges in advance future trends in the economy, increased by 1.7pts m/m in July to 168.6pts, the Bureau of Investment and Economic Cycles (BIEC) said in a report. Domestic demand is recovering strongly, the bureau stressed.
“The economy is still in the post-pandemic recovery phase. During the period of successive lockdowns, the main driving force limiting the collapse of its activity was exports and, in particular, the production of companies of foreign investors that have defined recipient markets. Currently, we are seeing a waning role in this factor. After the unfreezing of the economy, cumulative domestic demand took the place of exports. In the case of the manufacturing sector, spare production was also important for the process of the economy rebound,” the report reads.
BIEC notes that the pace of inflow of new orders slowed down in July this year compared to June, and this mainly concerned export orders.
“Admittedly, we usually see a slower inflow of orders during the vacation season, but the data from which the impact of the seasonal factor has been removed also point to a slight decline in orders so far. If this phenomenon becomes entrenched and price increases further constrain demand, we can expect a reduction in production volumes in the fall. Of the 22 industries, six are currently experiencing a decline in incoming orders. Of these, the largest is in the automotive industry. Manufacturers of capital goods are also experiencing a decline in the inflow of orders,” the report reads.
“Contributing to this are rapidly rising production costs. The PPI price index exceeded 7.2% (annual average) in June. It is true that recently some raw materials on global markets have stopped growing in price, but in the case of Polish companies, this is not the only factor determining the prices of industrial goods. Labor costs, energy prices, and taxes and levies imposed on entrepreneurs are growing equally fast. Every second entrepreneur names labor costs and the tax system as the strongest factors hindering business activity,” the report reads.
BEC reported that optimists (entrepreneurs assessing that there has been an improvement) prevail among large companies - with more than 500 employees, while pessimism prevails in small companies.
