Poland’s Purchasing Managers’ Index (PMI) edged up to 48.8 points in January from 48.5 points in December, signalling a slower pace of deterioration in manufacturing conditions but remaining below the 50-point threshold separating growth from contraction, S&P Global said on February 2.

The PMI is a composite indicator covering new orders, output, employment, suppliers’ delivery times and stocks of purchases. In January, the increase reflected slower declines in output and new orders, as well as a rise in input inventories, which were partly offset by a sharper fall in employment, S&P Global said.

“Business conditions at Polish manufacturers continued to deteriorate in January, but the overall trend in the survey data remained on a recovery path with the headline PMI rising for the sixth time in seven months,” Trevor Balchin, economics director at S&P Global Market Intelligence, said in a statement.

New orders fell for a tenth consecutive month in January, although the rate of decline eased compared with December. Export sales slipped only marginally, despite ongoing reports of weak demand from Germany. Output also declined for a ninth month, but the pace of contraction was modest and softer than the average seen over the recent downturn.

Other indicators pointed to tentative signs of a near-term recovery. Backlogs of work increased in January, marking only the third rise in the past 44 months. Purchasing activity expanded for the third time in four months as manufacturers sought to rebuild inventories, with stocks of purchases rising at the fastest rate in more than three-and-a-half years.

Employment continued to fall despite the improved outlook. Manufacturing jobs declined for a ninth straight month, with the pace of job losses the quickest in three months, reflecting still-weak demand conditions.

Confidence about the year ahead strengthened markedly. Output expectations climbed to their highest level since June 2021, well above the long-term average, as firms cited hopes of a recovery in demand, improved economic conditions, investment in capacity and expansion into new markets.

Cost pressures remained subdued. Input prices rose for a third month running, but only marginally, with some manufacturers reporting discounts amid competitive supplier negotiations. Output prices increased only slightly in January, underscoring the absence of significant inflationary pressure in the sector, S&P Global said.

Polish analysts say Polish manufacturing is in better shape than subsequent PMI readings suggest.

“We continue to believe that the PMI overstates the scale of the problems facing Poland’s manufacturing sector, as output in manufacturing grew solidly in 2025, by almost 2.5%,” PKO BP said in a note.

“In our view, 2026 should be better than 2025, mainly due to a strengthening investment recovery, which is supporting machinery producers and energy-related industries, an improvement in economic conditions in Germany driven by fiscal stimulus, and higher defence orders. The main risk factor we see remains the impact of increased low-cost imports from China,” PKO BP also said.

Poland’s industrial production surged 7.3% year on year in December, after a slide of -1.1% y/y the preceding month, latest available real data from the statistical office GUS showed in late January. 

Meanwhile, Poland’s producer price index (PPI) fell 2.5% y/y in December, following a revised fall of 2.3% y/y the preceding month, further extending the deflation trend, which is now expected to persist throughout 2025 and possibly into early 2026.