Poland Manufacturing Activity Deteriorates Sharply in July

Manufacturing

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Poland's manufacturing sector contracted considerably in July due to a sharp fall in output and new orders as high inflation and an uncertain economic climate weighed on demand, survey data from S&P Global showed on Monday.

The manufacturing Purchasing Managers' Index (PMI) fell to 42.1 in July from 44.1 in June. Any PMI reading below 50 suggests contraction in the sector.

Further, the latest PMI reading was the weakest since May 2020. The decline in both new orders and output was the worst since the height of the pandemic in 2020 and only surpassed previously by those seen during the global financial crisis in late 2008, the survey said.

The overall fall in demand was largely linked to elevated inflation and the uncertain geopolitical climate. Manufacturers reduced their workforce numbers considerably in July, with the rate of contraction little changed from June.

Although the input cost inflation softened to a 20-month low in July, overall input costs gr ew considerably amid the combination of high energy prices and unfavorable exchange rates.

The business confidence among goods producers turned negative for the first time since April 2020, owing to mounting concerns over recession in the near future. 

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