Polish manufacturing roars back, but shortages drive prices up

As in the previous months, April was marked by a revival of economic activity in the Polish manufacturing sector. However, industrial expansion has been hampered by shortages of raw materials and labor.

In April, PMI for the Polish industry reached 53.7 points, the research company IHS Markit reported. This is less than in March, when the reading of 54.3 points was the highest result in over three years. Nevertheless, it is still the second highest reading after June 2018.

Disruptions in supply chains continued to be a factor limiting production growth. About 44% of respondents reported greater delays in deliveries than in previous months (37% in March). This result is even higher than in March 2020, during the first wave of lockdowns

This results in increasing inflationary pressure. A record 78% of survey participants reported an increase in production costs, which translated into record increases in the prices of finished products. This is bad news for consumers who are already struggling with officially above 4% price inflation. In the coming months, prices of industrial goods may also rise to rapidly increasing prices of fuels, energy and services.

The revival in the Polish industry is in line with global trends. In Germany and the rest of the euro area, similar indicators recorded their highest levels in their 25-year history. This is a picture not only of a cyclical recovery, but also the result of a shift in consumer spending from services to material goods, forced by the lockdown policy.

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