The February manufacturing PMI was 48.0 points. The consensus expected the index to rise to 48.1 points. Some analysts indicated that the reading would remain at its level since February, when it reached 47.9 points. Consequently, the index remained below the neutral barrier of 50 points, indicating a deterioration in overall industrial conditions for the twenty-third month in a row.
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Manufacturing PMI – March 2024 data.
March data indicated: A significant decline in industrial production volumes, mainly associated with a weakness in new orders. Total sales have been witnessing a continuous contraction for 25 months, and the recent decline is due to weak demand locally and abroad. Survey respondents were primarily concerned with the decline in export orders from customers from Germany and the Netherlands. However, some companies indicated an increase in their sales in markets outside the European Union.
“Weak demand in the eurozone is stifling Polish producers, especially in Germany and France. The PMI Flash index for the euro area reached 45.7 points in March, while the index for Germany alone fell to 41.6 points. “The difference between the Polish and German PMIs is the largest since mid-2012 and is one of the largest in history,” says Trevor Balchin, economic director of S&P Global Market Intelligence.
He also added that Poland's PMI remained negative for the 23rd consecutive month in March, making the current period of decline equal to the longest previous decline recorded in the survey between September 2000 and July 2002.
Decreased hiring and purchasing activity
The impact of decreased demand on labor, which fell again, albeit to the lowest extent in 22 months. Some companies have increased hiring due to new product introductions and long-term development plans.
Shopping activity also remained on a downward trendHowever, recording the smallest decline since November 2023. Manufacturers sought to improve stocks of production resources, which were shrinking for the twelfth consecutive month. However, finished product inventories rose for the first time this year, which some companies attributed to worse-than-expected sales.
In March, the longest extension of delivery times since July 2022 was observed, which companies often explain by delays in transportation, especially of imported raw materials.
Price pressure remains weak
Costs of means of production It rose slightly in March, at a slower pace than in February. As S&P Global notes, some companies have successfully negotiated prices with suppliers who have excess inventory. Meanwhile, prices for finished goods fell for the twelfth consecutive month, reflecting intense competition for new orders.
“Price pressure remained weak “Input prices were slightly higher than in February, and input prices fell for the twelfth month in a row as companies tried to stimulate sales,” explains Trevor Balchin.
Business optimism is the lowest since the beginning of the year
As we read in the announcement, Polish producers still expect to increase production within 12 months Optimism in this regard weakened in March to the lowest level since January 2024. Companies were concerned about lower sales expectations and the overall economic situation.
Although the PMI is better than in February, it still indicates deteriorating conditions in Polish industry. The sector continues to suffer from low demand, especially from Western European markets.
Purchasing Managers' Index (PMI) for Industry – What did analysts expect?
Even before the data was published, their forecasts were provided by, among others: PKO BP experts. They assumed that the PMI would remain at the February level (47.9). “On the one hand, domestic fundamentals point to an improvement in the state of Polish industry, which is evident in business climate indicators and demand data released by the Central Statistical Office. On the other hand, weak external demand may be offset by favorable internal factors. Especially given the PMI’s focus on… Exporters” – they wrote.
Santander analysts were a little more optimistic. “We expect a slight increase in the index by about 0.5 points, which raises its value to 48.4 points and indicates that the sector is gradually recovering from the hole,” they wrote. They stressed that data on the manufacturing PMI will also come from Germany and the Eurozone. “The PMI readings from China and the PMI from the US yesterday turned out to be slightly better than expectations. We will also learn about March CPI inflation in Germany, which according to consensus should reach 0.7% on a monthly basis, as well as About orders for durable and industrial goods in February in the USA, which according to the market are expected to increase by 1.0% monthly. – they wrote.
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