“June was another difficult month for the Polish manufacturing sector. High inflation and escalating geopolitical tensions have led to a sharp drop in new orders, and therefore also in industrial production. Employment has fallen and business optimism has fallen to its lowest level since the outbreak of the coronavirus epidemic in 2020” – he wrote in the letter .
He added, “The rise in energy and raw materials prices led to the continuation of strong price pressure, but the slowdown in the pace of inflation growth, whether in terms of production costs or prices of final products, proves its decline.”
The study authors reported that the lower PMI reading reflected a decline in both production and new orders, and both declines were strong on the back of historical research.
“Larger declines were recorded only at the height of the financial crisis and during the pandemic. According to the companies surveyed, the decline in new orders was due to unstable economic conditions disrupted by the war in Ukraine and accelerated inflation. The rapid increase in prices significantly weakened demand, which It overburdened the budgets of domestic and foreign customers (new export orders experienced the strongest decline since May 2020).”
“The mood in the industry deteriorated further in June. This is the fourth month of the PMI decline, since May it was below the 50 point level, and the size of this drop (4.1 points) does not herald an economic slowdown, but unfortunately, a recession “- she wrote in a comment On the data on PMI, chief economist at Pocztowy Bank, Monica Kortic.
She added: “A somewhat bleak picture emerges from the S&P Global report. In June, both production and new orders fell, and in both cases the declines were strong on the back of historical research. This is the effect of rapid price increases, weakening domestic and foreign demand significantly.” (New export orders experienced the strongest decline since May 2020).
Industrial firms struggle with rising cost inflation and shortages of materials and goods. However, weak demand may limit some of these pressures in the coming months. Entrepreneurs have already begun to reduce purchasing activity (the biggest drop in two years) and take advantage of existing stocks, which led to their decline in June, for the first time since March 2021. Unfortunately, along with all these phenomena, the mood of producers is deteriorating significantly. Business optimism has fallen to a 25-month low, and this is already starting to translate into a drop in employment.
“The data published today clearly shows that the second half of the year will be different for the economy from the first half and we will experience a slowdown. How severe it will be depends on many factors. The most important of them is the war in Ukraine. It has lasted for more than four months and it is not known how long it will last. There are major disruptions in The global economy and financial markets, indicating one direction: recession. If negative scenarios occur around Poland, problems will not be avoided.The second half of this year will be close to a sign of technical stagnation at least in Poland for the whole year, due to growth in the first quarter near From 9.0% and probably very strong in the second quarter, GDP growth could reach around 4.0%. 2023″ – Kortic assessment.
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