October brought the first fall in the assessment of the current business situation below the level of 100 points, which means its deterioration. This was caused by a further reduction in domestic and foreign demand, coupled with persistent deflationary pressures and the growing scale of payment delays. However, companies still believe in the return of economic recovery, as evidenced by the still growing level of employment – as the Entrepreneurs Optimism Index shows.
In October of 2014 the assessment of the current business situation was 98.9 points, compared to 102.0 points in September. The forecast for the future situation in the next six months fell from 108.7 points in the previous month to 106.2 points in October. Both results are the worst since March 2014 when the study started.
Businesses no longer report improvement in the current business situation of their companies, whose growth rate has been weaker since mid-year – an which even deteriorated in October. This is due to the continuing decline in the number of new orders. The demand both domestic and foreign for products and services offered by Polish companies is lower. As a consequence, purchasing activity of the companies surveyed fell, which strengthens the adverse trend. The rate of decline in inventory decreases, which indicates decreasing activity of manufacturing plants. Therefore, the prospect of inventory rebuilding cycle starting, which could support the economic recovery in Poland, is less and less probable.
The situation regarding delays in payment is worsening, although the scale of this phenomenon has been growing at a slower pace in October. The financial results of enterprises continue to be adversely affected by the falling prices of finished goods sold and a slower decline in purchase prices of materials and semi-finished products. However, the first signs of a slow extinction of deflationary processes begin to appear.
Despite these problems, Polish companies still increase the level of employment and still plan to create new jobs in the next 6 months. This is also confirmed by other data showing the situation on the labour market, which indicates that it is improved despite the deterioration of many macroeconomic indicators – e.g. the registered unemployment rate fell in September to 11.5 percent. This indicates that entrepreneurs are convinced that the current difficulties they experience are temporary, so there is no need to reduce the level of employment. However, it should also be noted that the plans to create new jobs and invest in fixed assets in the six-month period are clearly less ambitious than a month before.