There is an exceptionally persistent recession in the Polish industry. Production continues to decline

"Production in the Polish processing industry decreased in March for the 23rd time in a row. Due to weak demand and stabilizing costs, industrial companies again reduced the prices of their goods.

This picture of the situation in the Polish industry is presented by PMI, an economic indicator calculated by S&P Global based on a survey among managers of approximately 250 enterprises.

In March, as S&P reported on Tuesday, the PMI increased to 48 points from 47.9 points in February. It was previously higher in November last year. This minimal increase is consistent with the estimates of economists surveyed by "Parkiet", which indicated a stabilization of the PMI.

PMI indicates that there is a persistent recession in Polish industry

After the second consecutive increase in March, the PMI still indicates that the Polish industry is in an extremely persistent recession. For the 23rd time in a row, this indicator is below 50 points, which theoretically means that the economic situation in the processing industry is deteriorating month by month. The distance from this border is a measure of the rate of this deterioration. In March it was still noticeable. Moreover, the main components of PMI, reflecting changes in production and new orders, have remained below 50 points for 25 months, the longest in the history of this indicator, dating back to 1998.

Looking at the bigger picture, PMI remains in a mild upward trend. Meanwhile, the direction of changes in this indicator usually says more about the economic situation in the industry than its level. Over the past three months, the PMI averaged 47.7 points, the highest since April 2023, excluding January. However, the detailed results of the S&P survey among companies do not give much hope for a quick improvement in the economic situation in the Polish industry.

Production in the Polish processing industry decreased in February for the 22nd time in a row. There hasn't been such a long decline in this sector since at least 1998. But companies are becoming more optimistic.

PMI is calculated based on company managers' answers to questions regarding changes (compared to the previous month) in production, order value, employment, delivery time and inventories.

  The latest survey shows that in March, manufacturers continued to struggle with weak demand, especially from Germany and the Netherlands, which forced production cuts. 

This, in turn, meant that once again more companies declared a decrease in employment than its increase, although the advantage of the former was among the smallest in the last two years.

The PMI measuring the economic situation in the euro zone industry dropped from 46.6 points in January to 46.1 points in February, and an increase to 47 points was expected. However, the PMI for the services sector increased from 48.4 points to 50 points, i.e. to the level separating recession from expansion.

Weak demand for 12 months

Due to weak demand, companies sought to reduce inventories of materials and components for the 12th consecutive month. In March, however, this did not prevent an increase in stocks of finished products, which some managers explained by weaker-than-expected sales. In such circumstances, companies again reduced the prices of their goods, even though the costs of materials increased slightly. This picture is consistent with the average estimates of economists surveyed by "Parkiet", according to which the prices of sold industrial production in Poland decreased by 9.5 percent in March year on year after a 10.1% discount in February.

When assessing the prospects of their companies, managers surveyed by S&P are more often optimistic than pessimistic. More of them expect an increase in production in the next 12 months than a decrease. But in March, the scale of this optimism was slightly smaller than in the previous two months."