Poland’s PMI Index Points to Slowdown, but Labor Market Remains Strong


The market is in a surprising situation. Business sentiment indices directly point to an upcoming slowdown. On the other hand, the labor market is very strong and a recession does not seem to be looming. In the background, a strong dollar is suppressing oil prices.

Less Bad Prospects for Poland

Yesterday, we learned data based on which recession expectations are formulated. The PMI index for the industry in Poland reached 43.9 points. For the interpretation of this indicator, the value of 50 points is crucial. It is the percentage of positive responses about the prospects for the development of the industrial sector. Scores below 50 points show the prevalence of negative responses. Since more than half of the surveyed managers expect a worsening situation, it’s somewhat of a self-fulfilling prophecy. In February and March, the score exceeded 48 points and was approaching the mentioned 50 points barrier. The last time it was above was shortly after the initiation of the Russian invasion of Ukraine.

Europe is Doing Even Worse

There are media in Poland that like to emphasize that it may not be best here, but at least Germany is doing worse. In the case of the PMI index, Western Europe also generally does not fare well. Morale in Germany is particularly low. For three months, Germany has been struggling not only to break the 50 points barrier, but are even below 40 points. This is the worst result in the entire survey. Although, they can always console themselves by saying that Austria has the same. The entire euro area received a weaker result than Poland, which is 43.4 points. Interestingly, Russia, which theoretically should be in a disastrous situation, shows results above 50 points without interruption for over a year. Unless of course we consider statistics from Russia as reliable, but that’s a topic for another story.

Oil Price Drops

For the first time since September 8, the barrel of oil just broke below the $90 level. Analysts point out the strengthening dollar as one of the reasons for the price decline. If the US currency appreciates, the price of oil expressed in local currency is higher. This rule is very common in the market, although often disproportionate. Right now, oil is becoming significantly cheaper than the dollar is strengthening. There is no shortage of voices from oil producers that the current decline is a temporary situation and they expect an increase in demand for the commodity. This will not affect the situation at Polish stations for now, as prices have been more or less set administratively. However, it will affect the cost of replenishing reserves after the wonders that are happening now. There will be something to finance the repair of broken distributors…

Today in the macroeconomic data calendar there are no important readings, but remember about tomorrow’s MPC meeting.

Maciej Przygórzewski – chief analyst at InternetowyKantor.pl and Walutomat