Bloomberg News

Polish Manufacturing Growth Unexpectedly Accelerated in July

August 01, 2011

(Adds zloty in fifth paragraph, PMI’s components in eight, ING comment in 10th.)

Aug. 1 (Bloomberg) -- Poland’s manufacturing growth unexpectedly accelerated in July for the first time in four months as output and new orders picked up, easing concern the European Union’s largest eastern economy is losing momentum.

The purchasing managers’ index rose to 52.9 from 51.2 in June, London-based Markit Economics said today, based on a survey for HSBC Holdings Plc. The median estimate of 18 economists surveyed by Bloomberg was 50.6. A reading above 50 indicates growth.

“Recent weakness in many countries’ PMI results raised questions about a more prolonged soft patch in the global recovery,” Murat Ulgen, HSBC’s chief economist for central and eastern Europe, said in a statement. “Strength in the forward- looking indexes such as employment and new orders are reason for optimism in the case of Poland.”

Previous indicators suggested the Polish economy is slowing after hovered near the fastest growth pace since 2008 in the six months through March. Second-quarter gross domestic product was probably “slightly weaker” than the previous period, when it expanded 4.4 percent from a year earlier, Finance Minister Jacek Rostowski said July 26.

The zloty traded at 3.983 per euro at 11:49 a.m. in Warsaw, up from 4.001 late Friday.

Rate Impact

Stronger-than-expected PMI data may support arguments by central banker Anna Zielinska-Glebocka, who said July 21 that the Monetary Policy Council should raise interest rates once or twice in the next 12 months because borrowing costs are “inadequate for the present economic situation.”

Policy makers paused a cycle of monetary policy tightening in June, saying four increases this year may be enough to tame inflation that has stayed above the central bank’s 2.5 percent target since October last year.

Output has expanded every month for the past two years, and the latest rate was the fastest since April. Manufacturers also recorded a second successive monthly decline in backlogs for the first back-to-back decline in a year, Markit said in the statement.

While new orders have risen 21 times in the past 22 months, the July expansion was slightly weaker than the trend over this period and the volume of new export orders fell for the second month running, according to the survey.

“We don’t assume that the July PMI index rise means a new wave of optimism, it rather means seeking a new level at which sentiment could stabilize in the second part of the year,” Mateusz Szczurek, chief economist at ING Bank Slaski said in an e-mailed comment.

The July PMI indicates also July industrial production growth rebounded to between 5-12 percent from a 2 percent increase in June, with the final figure “closer to the lower end of the forecasted range,” Szczurek said.

--With assistance from Barbara Sladkowska in Warsaw. Editors: Balazs Penz, Willy Morris

To contact the reporters on this story: Monika Rozlal in Warsaw at Dorota Bartyzel in Warsaw at

To contact the editor responsible for this story: Balazs Penz at

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