In March, the PMI showed essentially a marginal increase of 0.1 points to a level of 48 points. This indicates that the main sentiment index of the industrial sector remains in recession. It’s been nearly two years now that the sentiments of company managers have not been the best. However, the basis for the poor sentiments is changing. In the initial period, the predominance of pessimists over optimists was influenced by prices and their volatility. There was also a great deal of uncertainty related to the ongoing conflict across our eastern border. Currently, however, the industry suffers from a different kind of ailment – a lack of new orders.
Despite indications that consumption will clearly rebound in 2024, the prevailing factor for the industry will continue to be a slowdown in international trade. We are talking about a decline in exports mainly to Western Europe. Only to a small extent does our foreign trade, and thereby companies, save exports of goods to the east – mainly to Ukraine.
Considering that production capacities are slowing down, inventories are shrinking as a result. It’s been exactly a year since inventory levels have been decreasing, which will also have an impact on GDP readings for the first quarter of 2024. Entrepreneurs also continue to maintain employment, which is also confirmed by the hard data from the Central Statistical Office (GUS). This probably stems from still large reserves of faith in the improvement and stabilization of the economic situation.
Commentary by Mariusz Zielonka, economic expert at Lewiatan
