Regional leading indicators continue to improve for the second month in a row and may limit the space for further easing of the monetary policy.
The Czech Flash shows that the Czech industry might bottom out within the next 3 months. Although industry performed poorly in November, the Flash leading indicator rose in December for the second consecutive time and stands at fivemonth highs (-59.2). Nevertheless ambiguous developments in the individual components of the Flash are another reason to be prudent. While the Future manufacturing tendency ( OECD) is rapidly improving, and the German business confidence index Ifo as well as new orders in the automotive industry are also developing well, the Czech PMI index (foreign orders) is continuing to fall.
The first forecast of the Polish Flash indicates similarly that things may change for the better within the next three months. After falling for more than two years, the Polish Flash rose for a second consecutive month in December. Admittedly, the gains of the Flash are still modest – at -159 points, it is not far off of its lowest October levels. Just like in the Czech Republic, we will therefore need to see at least the January data in order to be sure of a turnaround. On the other hand, the Polish Flash, unlike that of the Czech Republic, shows signs of stabilisation across all of its components. The bets on a turnaround in industry are also consistent with our reticent attitude to the possibilities of the National Bank of Poland continuing to ease its monetary policy.