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BIEC: economic climate inches up in October


2011-10-27



The Leading Indicator (WWK), which provides information on future trends in the economy, gained 0.5 points in October, the Bureau for Investments and Economic Cycles (BIEC) reported. However, the marginal improvement does not alter a deeper trend observed for over a year that points to the likelihood of economic growth stagnating, the Bureau commented.

Of the eight component indicators of the WWK, four improved compared with September and four deteriorated. The biggest positive contributor was a marked increase in money supply, partly reflecting a weaker zloty. New manufacturing orders showed a slight improvement after deteriorating consistently since the start of the year. Nevertheless, new export orders slowed further last month in all the main sub-sectors of manufacturing. Domestic orders were relatively the strongest in food and clothing. There was also a marginal increase in productivity.

At the same time, managers' assessments of the general domestic economic situation and prospects took a further plunge in October, and perceptions of own company health also worsened, though by a smaller margin. One of the factors exerting a negative impact on companies' financial performance is the rapid growth in producer prices, which were up by over 8% y-o-y in 2011 to date.

The Bureau also pointed to a small rise in the inventories of finished products after several months of declines, due to a combination of dynamic output growth and weaker orders.

The WWK is a prognostic instrument. It is a measure of the current state of economic activity and provides advanced information on upturns and downturns in economic activity in relation to GDP as well as data on production, retail sales, wages and household incomes. The average prognostic timeframe of the WWK index in relation to the actual state of economic affairs ranges from 3 to 12 months, depending on the phase of the economic cycle.



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