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PMI rises by 1.7pps m/m to 53.8pts in August, highest level in 3 years

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Date: 2010-09-01 12:42

The Purchasing Managers Index (PMI) increased by 1.7pps m/m to 53.8pts in August, marking the strongest improvement in the business climate for over three years (i.e. reaching the highest level since July, 2007), Markit, a financial information services company, said in a communiqué on Wednesday. The figure has remained above the 50pts mark that separates contraction from expansion for the 10th month now.


"The PMI posted 53.8 in August, up from July’s six-month low of 52.1. The latest reading was the highest since July 2007, signalling a solid improvement. The current period of readings above 50.0 now stretches to ten months," the release reads.

Markit stresses that growth of incoming new business in the Polish manufacturing sector strengthened in August. The rate of expansion equalled the recent high seen back in November 2009, and remained well above the long-run survey average. Domestic demand was a key contributing factor to the improved intake of new orders during the month, as growth of new export business slowed to the weakest since last October.

"Driven by faster growth of new work, production increased at the fastest rate since March 2007. Manufacturing output in Poland has risen continuously since August 2009. The strong gain in new business also led to an increase in backlogs," the document continues.

Analysts note that the improvement in Polish manufacturing business conditions in August was illustrated by a rise in jobs in the sector. This was only the third time since May 2008 that employment had risen overall, although the pace of job creation was only marginal in August.

"The good news is that the improvement apparently resulted from domestic demand. Growth in export orders softened over the month as competition intensified among regional exporters, which was manifested in the recent upbeat export performance in Hungary, while PLN appreciation until recently may have played a role here as well. Domestic consumption was the main factor in Poland’s avoiding recession in 2009, and an improved labour market (in seasonally adjusted terms, too) and double-digit growth in industrial production confirm another year of Poland’s economic outperformance of the region," commented Kubilay Ozturk, economist at HSBC, quoted in the release.

Ozturk added that as for inflation, pass-through from the cost side appears to have continued in August, with output prices rising since April. "That helps justify the focus of the Monetary Policy Council of the National Bank of Poland on inflationary risks, but a wait-and-see approach still predominates among rate-setters," the economist concluded.

lk/tom