Bad forecast. Christmas without big purchases

Usually, at this time of the year, the warehouses of Polish companies were filled with goods. Stocks were stocked for the holiday shopping boom. This time it is not so. Entrepreneurs expect that this year, before Christmas, Poles will not spend a lot of money in shops.

The level of inventories of finished goods in enterprises’ warehouses has hardly changed in recent months. This means that there was an exceptional event – no seasonal increase in inventories was observed in the pre-Christmas period. In view of shrinking orders and the deteriorating financial situation of companies, nobody wants to be left with cash frozen in warehouses.

The Leading Business Climate Index (WWK), informing about future trends in the economy, recorded a decrease of 2.3 points in relation to the previous month’s value. These are the latest calculations by the Investment and Economic Cycles (BIEC). WWK is now at 158.8 points. The only comforting thing is that a few months ago it was even lower – around 130 points.

The BIEC research shows that we can expect poor results of industrial production in the near future. This, in turn, will have a negative impact on GDP dynamics. Perhaps the expected downturn in economic activity will not be as deep as this spring, but the effects of the pandemic may be felt for a long time.

November 2020 brings another significant decrease in the inflow of new orders to enterprises from the industrial processing sector. In the previous years, in October and November orders flowed in a wider stream than in the remaining months. This year, there is no sign of a pre-holiday revival in industry.

In November, the majority of companies experiencing a decline in orders over those that recorded their increase amounted to about 15 percent. This is more than a twofold increase compared to the situation a month ago. In terms of sectors, clothing factories and crude oil processing are the most severe crisis in terms of the number of orders. The furniture industry and the industry producing means of transport cope relatively best – mainly thanks to foreign orders.

BIEC also informs that, in the wake of shrinking orders, the financial situation of enterprises is deteriorating. While in the period May-July 2020, enterprises reported an improvement in finances compared to the initial period of the pandemic, November brings a significant deterioration in the opinion of managers on this subject.

November also saw a very large increase in cash in circulation. On the one hand, this is a consequence of fleeing unprofitable bank deposits, and on the other, a signal that Poles are not sure what will happen in the economy during the fall wave of the pandemic. It is also possible that a larger amount of cash is needed to support the shadow economy that is expanding during the crisis.

Jacek Brzeski

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