CEE: Manufacturing PMIs turn around

Erste Bank Research Team Erste Bank

On the radar

Manufacturing PMI indices dropped in Czechia, Hungary and Poland in May. In Romania, the index increased marginally.
1Q25 GDP growth at 3.2% y/y in Poland was driven by domestic demand.
In Serbia 1Q25 GDP was confirmed at 2.0% y/y.
Romania will publish unemployment rate and producer prices at 8 AM CET.
At 8.30 Hungary’s 1Q25 GDP structure will be released.
At 11 AM CET Croatia will publish May’s inflation rate.

Economic developments

Manufacturing PMI indices dropped in Czechia, Hungary, and Poland in May. The index was disappointingly low in the case of Czechia and Poland, while in Hungary, the change was rather marginal. In Czechia, the overall downturn in the sector worsened midway through the second quarter amid a faster decline in output levels and a renewed drop in new orders. Poland experienced a sharp reversal, as recent readings of the manufacturing PMI had been above the threshold of 50. The fall to 47.1 in May was quite surprising, driven by a decline in new orders that led to a contraction in output. Only in Romania did market sentiment improve marginally in May. This improvement in the PMI was mainly driven by the output component. Romanian manufacturing had a slower-than-expected start to the year, but the trend now looks promising.

Market movements

The reaction in the Polish FX market to Nawrocki’s victory in the presidential election was short-lived. The EUR/PLN moved back to 4.25 in the early afternoon hours. However, political uncertainty is expected to remain elevated in Poland in the near future amid rising speculation about the future of the ruling coalition. Prime Minister Tusk announced that a confidence vote will take place shortly to remove any doubts about whether the current government has a mandate to rule. Romania’s central bank injected liquidity into domestic banks for a second consecutive week as it sought to further calm money markets. The amount was smaller compared to a similar operation last week. Romania also sold RON 936.5 million of 9-year bonds, which were priced to yield 7.54%. Slovakia was also active on the bond market on Monday as the Slovak Debt And Liquidity Management Agency sold 817 million euros in new June 2029-dated government bonds.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.