CEE: Manufacturing PMIs turn around

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.

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