Poland’s PMI fell 1.9 points to 47.6 in December, dipping further below the 50-point line separating contraction from growth to the worst result since April 2013, IHS Markit reported on January 2. 

The indicator fell in the sixth consecutive month in December, which also proved the second straight month in which sentiment in the Polish industrial sector lingered below the 50-point threshold.

“Output and new orders both declined at the fastest rates since June 2009. New export business and backlogs of work both fell for the fifth month running, while employment was broadly unchanged from November,” IHS Markit said.

The index’s compiler also said the survey results revealed the weakest rise in input prices for nearly a year and a half.

The poor PMI reading owes to weaker demand from the EU, particularly Germany, Poland’s key trade partner. On the positive side, output expectations for the next 12 months brightened in December, although by an insignificant margin, IHS Markit said.

That said, ING notes, the result of the December PMI survey is at odds with the results provided by Poland’s statistical office GUS and the quarterly survey of the National Bank of Poland.

“[There is], at most, a modest link between survey evidence and actual manufacturing turnover. We expect industrial production growth to increase to 7.3% year-on-year from 4.7% in December, reflecting positive statistical effects,” ING said in a comment on the PMI reading.

The softer industrial performance among Eurozone countries should only affect Poland's readings with a lag, ING said.

For now, Poland’s industrial sector remains in good shape. Industrial production growth decelerated to still solid 4.7% y/y in November (picking up to 5.5% y/y upon adjustment). Data for December is due later this month.

The December reading of the PMI fits the currently dominant scenario of incremental deceleration of economic growth in Poland to below 4% y/y in the coming quarters.

Previous predictions of a slowdown proved amiss, however, with the third quarter GDP growth actually showing an acceleration to 5.7% y/y in adjusted terms, 0.5pp above the annual expansion in Q2.