In September, the PMI index increased from 43.1 to 43.9 points. Despite this improvement, the situation in the European industry remains challenging. Poor performance in the manufacturing sector is now typical for most European Union countries. In this context, it is worth noting that the decline in Poland is smaller than in the entire euro area, which may indicate some detachment of our economy from the largest problems of the continent.
The rating agency Standard & Poor’s pointed out that each of the five components of the PMI index is declining, indicating a broadly based slowdown in the manufacturing sector.
In the face of such a situation, the forecasts for the coming months are not optimistic. Recent studies from the Ifo Institute indicate that the condition of German companies and their future forecasts are steadily declining. Germany, as the largest economy in Europe, plays a crucial role in shaping the economic situation on the continent. If Poland’s main trading partner has problems, our export industry will likely display poor results as well.
One of the main problems of the industry is poor demand. According to studies by the Central Statistical Office (GUS), in Poland, as many as 40% of companies identify demand barriers, and abroad, this figure stands at 31%. This indicates the global nature of the problem.
However, not everything is grim. A certain improvement in the local market can be expected in the coming months. Salaries in Poland are starting to grow at a faster pace than inflation. This bodes well for household spending, which can drive domestic demand and provide some support for domestic industry.
In summary, although the PMI index is increasing, the industrial sector in Europe still faces serious problems. The situation in Poland seems to be slightly better than the average in the euro area, but there are still no signs of stabilization. Over the next few months, the key will be to observe trends in the economies of our most important trading partners, and also how the domestic demand shapes up.
