July 2 (Bloomberg) -- Polish manufacturing dropped to a 35-month low in June, remaining for a third month below 50, a level indicating contraction, as new orders and output declined and inflation eased, HSBC Holdings Plc said.
Poland’s purchasing managers’ index, a gauge of manufacturing, fell to 48.0 in June from 48.9 in May, HSBC said today in a statement posted on the website of Markit Economics. The median estimate of 18 economists in a Bloomberg News survey was 48.6.
Companies cut output and purchases of new inputs during the month and new export orders declined for the fourth time in five months, signaling “broad-based weakness in both domestic and export markets,” HSBC said. Growth in the European Union’s largest eastern economy, the only member of the 27-nation bloc to avoid a recession in 2009, is expected to slow to 2.7 percent this year from 4.3 percent last year, according to the European Commission’s forecast.
“The PMI shows ongoing deterioration of the conditions in the manufacturing sector,” Agata Urbanska, a London-based economist at HSBC, said in an e-mailed statement. “The pace of output contraction deepened in June to levels last seen in mid-’09 in line with deteriorating new orders.”
Economic confidence in the euro area slumped to the lowest in more than 2 1/2 years in June. The European Central Bank said last month that the euro-region economy will probably shrink 0.1 percent this year, compared with the commission’s forecast for a 0.3 percent contraction. Poland sells 55 percent of its exports to the euro region.
Average input prices rose at the slowest rate since March 2010, while inflation has eased gradually since peaking at the start of the year, “reflecting falling oil prices and reduced pressure from demand on raw materials,” HSBC said.
The zloty traded at 4.226 per euro at 9:30 a.m. in Warsaw, little changed from the close on June 29. The yield on the government’s five-year bond was unchanged at 4.73 percent.
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