Dec. 19 (Bloomberg) -- Polish industrial output unexpectedly declined last month as the euro area’s recession stunted growth in the European Union’s biggest eastern economy.
Production fell 0.8 percent from a year earlier, after a 4.6 percent increase in October, the Central Statistics Office in Warsaw said today. That compared with the median estimate for a 0.5 percent increase in a Bloomberg survey of 26 economists. Output declined 4.8 percent from the previous month.
The economy of the 17-nation euro area, where Poland ships more than half its exports, will contract 0.5 percent this year and 0.3 percent in 2013, the European Central Bank forecast on Dec. 6. Polish producers can’t count on domestic buyers either, with consumer spending at the weakest in more than a decade. Poland’s central bank should cut interest rates another half-point due to flagging domestic demand, policy maker Anna Zielinska-Glebocka said on Dec. 11.
“The latest batch of data increases the Monetary Policy Council’s propensity to ease,” Piotr Bujak, an economist at Nordea Bank in Warsaw, wrote today in an e-mailed note. “Even moderate hawks on the Council will support not just the expected quarter-point rate cut next month, but two more in the first quarter, which would take the benchmark rate to 3.5 percent.”
The zloty traded at 4.0796 per euro at 2:32 p.m. in Warsaw, holding its 0.1 percent gain on the day. The yield on the two-year government bond fell three basis points to 3.261 percent.
Employment at companies with more than nine workers declined 0.3 percent last month after companies failed to add any new jobs between July and October. That was the first drop since March 2010.
Italian carmaker Fiat SpA plans to dismiss 1,500 workers after announcing on Dec. 7 that it will build fewer than 300,000 cars in Poland next year, half 2009 output. Polskie Gornictwo Naftowe i Gazownictwo SA, the country’s dominant gas company, said today it will cut 900 jobs by Jan. 1.
Poland’s economy expanded 1.4 percent in three months through September from a year earlier, the slowest pace since the second quarter of 2009. Growth will ease to 1.5 percent next year, the least since 2002 and down from 4.3 percent last year, according to the central bank’s forecast.
“Industry and construction will be in the doldrums for at least a couple quarters and only an economic recovery in the euro zone may provide some support,” Maciej Reluga, economist at Bank Zachodni WBK, said in an e-mailed note today.
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