Poland's Purchasing Managers' Index (PMI) inched up 0.1 points to 50.7 in March, the economic intelligence company S&P Global said on April 1 (chart).

The increase indicates that an overall improvement in business conditions in the manufacturing sector became a mini-series after the indicator moved past the 50-point mark in February for the first time since April 2022. 

Feeble as it is, the March uptick has analysts cautiously optimistic about 2025 in Poland’s manufacturing although there is a caveat concerning the effect of the trade war on the EU by President Donald Trump.

“Faster growth of new orders and output and a renewed rise in stocks of purchases were partly offset by a reduction in employment, while suppliers' delivery times were broadly neutral,” S&P Global said in their data release.

The sustained increase in new orders was matched by faster growth in output, and the first back-to-back expansion in over three years. Though moderate overall, production growth was sufficient to generate a net increase in finished goods inventories, according to S&P Global. 

On the back of business conditions improving somewhat, Polish manufacturers look to the future with renewed optimism, as the 12-month outlook strengthened further in March, with confidence rising for the fourth successive month. 

Manufacturers attributed optimistic forecasts to recovering demand, new product releases, increased activity in the construction sector, new customers, the National Recovery Plan and higher exports. 

Manufacturers boosted input purchases in March as new orders strengthened, marking the first rise since May 2022. Despite faster output growth, stocks expanded for the first time in eight months. 

Supply chains remained stable, and backlogs shrank at the slowest rate in a 34-month decline series. Employment fell after prior gains while rising input demand drove costs up at the fastest pace in two years, though a strong złoty tempered import prices. Output prices rose consecutively for the first time since early 2023, but overall price pressures stayed below historical averages.

"In line with our expectations, the return of PMI above 50 points in February was not a one-off, and in our opinion March confirmed the emerging industrial recovery,” PKO BP said in a comment.

“The March PMI suggests that Polish industry is placing more hope in the emerging economic recovery of the EU, particularly Germany, than it fears a global downturn linked to a potential full-scale trade war, perhaps seeing an opportunity in the resulting shifts in global supply chains,” PKO BP also said.

In terms of actual data, Poland’s industrial sector – covering manufacturing, energy production, mining and quarrying, as well as water and waste management – disappointed in February, the latest available figures show.

Output contracted 2% year on year in the second month after falling 1% y/y in January, GUS said in late March. GUS will publish March data from Poland's industrial sector in the third week of March.

Meanwhile, the producer price index (PPI) declined 1.3% y/y in February after a revised fall of -1% y/y the preceding month, GUS also said.