Manufacturing PMIs trending upwards

On the radar

• Manufacturing PMIs increased in September in all CEE countries, but in Czechia where it marginally declined to 49.2 (from 49.4 in August).

• September’s flash inflation landed at 4.2% y/y in Croatia.

• Romania released unemployment rate at 5.9% and producer prices at 3.2% y/y.

• There are no other releases scheduled for Thursday.

Economic developments

Manufacturing PMIs have been converging in Germany, Romania and Czechia toward the threshold of 50. Only Poland has experienced a series of weaker months with manufacturing PMI visibly below the threshold of 50 but recent months brought a change in a trend and uptick became more visible. In September, manufacturing PMI increased toward 48 as the rates of decline in many variables eased since August and the 12-month outlook for production remained positive. Despite manufacturing PMI below the threshold of 50, Poland is on track to be the fastest growing economy in the region in 2025. In Romania, manufacturing PMI at 49.8 in September represents a 15-month high. The evolution of the new orders component shows growth for the first time after 14 months of deterioration, and it is the highlight of the release. In Czechia, manufacturing PMI declined marginally to 49.2 in September.

Market movements

CEE currencies have strengthened somewhat against the euro since the beginning of the week with EURHUF going below 390. Poland’s Ministry of Finance Domanski said that fiscal reforms could help to keep the public debt below the threshold of 55% of GDP that triggers austerity. According to Domanski, strong economy helps to keep long-term yields stable in face of fiscal challenges. Romania announced issuance plan for October with targeted supply of RON 7 billion. Apart from longer dated government papers, Ministry of Finance plans issuance of T-Bills to finance wider budget deficit.

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