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BIEC: economic climate down slightly in February


The Leading Indicator (WWK), which provides information on future trends in the economy, edged down by 0.3 points in February, the Bureau for Investments and Economic Cycles (BIEC) reported.

The WWK has shown considerable volatility in recent months, which reflects ongoing adjustment processes in the economy, where conditions are unstable and where many companies are fighting for survival by cutting costs and adapting output, inventory and staff levels to demand, the Bureau notes.

Three components of the WWK deteriorated in February and five improved compared with the month before. The biggest negative contributor was a further increase in inventories of finished goods in the enterprise sector, indicating perceived weakness of demand. The problem of excessive stocks is most acute in the chemicals and car-making sectors. Labour productivity in the enterprise sector decreased, and views about the financial situation of own company deteriorated for another consecutive month. New manufacturing orders were also lower, but the extent of the decline is smaller than in the first half of 2012, the situation in the automotive industry has stabilised, and some sectors, such as food and pharmaceuticals, are reporting an improvement, the BIEC says. The value of household debt rose marginally, mainly due to currency fluctuations. More importantly, views about the general economic situation improved for the fourth straight month. And sentiment on the Warsaw Stock Exchange also continued its upward trend.

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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