Polish PMI improved in November for the second consecutive month, however, the index still remains below the 50 threshold, for the 8th month running. The PMI increase is in line with a similar improvement in German manufacturing (PMI up to 46.8 in November from 46.0 in October) and Chinese PMI (to 50.5 from 49.5 previously). The overall deterioration in business conditions faced by Polish manufacturers eased amid slower decline in output (output index at 4-month high) and in new export orders (new export orders index at 8-month high). The better than expected PMI for Poland does not change the grim outlook for the Polish economy in the upcoming months - we continue to expect the GDP slowdown will deepen in 4Q12 and 1Q13. Still, the upward PMI movement, signaling the overall deterioration in business conditions continues to ease for the second month running, is an optimistic development and increases the odds of a rebound in economic growth in 2Q13. The November PMI reading does not change our expectations for a 25bp interest rate cut at the upcoming MPC meeting this Wednesday.
Manufacturing output fell for the seventh successive month in November, however the rate of contraction was the weakest since July.
Falling output was mainly linked to declining new orders: the volume of new business received by Polish manufacturers declined for the tenth successive month. Firms reported weaker demand both domestically and internationally. Namely, firms reported weak demand from European markets and competition from low-cost Asian producers. Employment at Polish manufacturers declined for the third month running in November, but the rate of job shedding was the slowest in the current sequence.
Poland, Manufacturing PMI (Nov): 48.2
Previous (Oct): 47.3
Consensus: 47.4, KBCS forecast: 47.6