CEE: Manufacturing PMIs increase in Romania and Poland

Erste Bank Research Team Erste Bank

On the radar

PMI index in Romania increased to 47.5 in April. In Poland it landed at 48.8 and in Czechia at 52.9.
Today, producer prices in March will be published in Romania at 8 AM CET.
Slovenia releases trade data at 10.30 AM CET.

Economic developments

Manufacturing PMIs in April generally increased across the region. In Romania, the PMI index rose to 47.5 in April, while in Poland and Czechia it inched up to 48.8 (previously 48.7) and 51.9 (previously 52.8), respectively. Another angle shows that Czechia’s manufacturing sector is in expansion: April data signaled a solid improvement in operating conditions at Czech manufacturing firms. By contrast, PMIs in Poland and Romania remain below the threshold of 50, meaning manufacturing is still in contraction territory. In Romania, the PMI index recorded a second consecutive month of relative improvement in April, indicating a slower pace of contraction compared with the previous month. In Poland, demand remained subdued, with another decline in new orders leading to a renewed fall in output, as opposed to Czechia, where output and new orders continue to expand. However, Poland’s broader set of sentiment surveys beyond the PMI indicates that the current situation for companies is still relatively good, while at the same time cost risks and concerns about raw material shortages are increasing. This would obviously have negative consequences if the conflict continues. Finally, Germany’s manufacturing PMI came in at 51.2 in April, marking the third consecutive month in expansionary territory. This may offer some optimism for the domestic manufacturing sector, as external demand appears to be recovering.

Market movements

In Romania, the debate on a no-confidence motion against Prime Minister Bolojan will begin today before noon (CET). Rising political instability is weighing on markets, with EUR/RON at 5.19 and 10-year yields at 7.2%. Poland’s central bank begins a rate-setting meeting, with the interest rate announcement due on Wednesday. We expect it to keep its key rate unchanged at 3.75% under a wait-and-see approach, though we anticipate a hawkish tone following the upside surprise in April’s flash CPI (3.2% y/y). Later this week, central banks in Czechia and Serbia will also decide on rates. In Czechia, Governor Michl underlined that the country needs to sustain positive real interest rates to prevent a repeat of the inflation wave. Finally, the ongoing conflict in the Middle East keeps commodity prices elevated, with Brent crude trading above USD 110 per barrel.

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Erste Bank Research Team

Erste Bank

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