Poland’s manufacturing PMI edged up from 50.6 pts in February to 50.7 pts in March, which was below market expectations (50.9 pts) and our forecast (51.0 pts). Consequently, PMI remained above the 50-point mark separating growth from contraction for the second month running. What pushed the index up was a stronger contribution of 3 out of its 5 components (current output, new orders, and inventories), while a lower contribution of employment and delivery times had the opposite effect.
Export orders grow for the first time in three years
As regards the data breakdown, particularly noteworthy is the continued, strong growth in total new orders. At the same time, new export orders exceeded the 50-point mark for the first time since February 2022. The surveyed companies pointed to stronger exports driven by the recovery in the EU market, which is consistent with the PMI survey results for the Eurozone (see MACROmap of 31/03/2025).
Polish manufacturing sector anticipating recovery
Growth in new orders resulted in further growth in current output. It is worth noting here that the pace of backlogs reduction slowed down substantially in March, which suggests that businesses shifted their production capacities towards current orders. At the same time, businesses markedly increased their purchasing activity in March, buying more intermediate goods, which translated into an increase in their inventories. Finished goods inventories have expanded as well. In our opinion, it indicates that businesses are adjusting the scale of their operations to the anticipated economic recovery. Our conclusion is underpinned by the expected 12-month output index reading, which has been on an upward trend since December 2024, climbing to the highest level since June 2021 in March 2025.
Higher purchases beginning to exert cost pressure
Stronger purchasing activity of businesses translated into the first increase in input prices since September 2024. Interestingly, the increase took place despite the marked appreciation of the PLN seen early this year. At the same time, the increased purchasing activity did not lead to an extension of delivery times. Stronger demand made companies raise their output prices for the second month running. Nonetheless, our conclusions remain as they were: we expect core inflation to fall gradually in the months to come.
PMI signals continued recovery in Q1
The average for PMI increased from 48.8 pts in Q4 2024 to 50.0 pts in Q1 2025. The results of PMI surveys underpin our scenario of continuation of economic recovery into Q1. We still anticipate the Polish GDP to have edged down from 3.2% YoY in Q4 2024 to 3.1% in Q1 2025. At the same time, in our view, today’s data is neutral for the PLN and the yields on Polish bonds.
