Poland's manufacturing sector contracts again in August, PMI shows

WARSAW (Reuters) -Poland's manufacturing sector contracted further in August, marked by ongoing declines in output and new orders, though the pace of deterioration eased slightly, a survey reported on Friday.

The Poland Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 46.6 in August from 45.9 in July, remaining below the 50.0 threshold that separates growth from contraction. This marks the index's second consecutive monthly increase but still reflects a challenging environment for manufacturers.

Analysts polled by Reuters had expected a slightly higher PMI reading of 46.8 for August.

New orders fell for the fifth consecutive month, albeit at a slower rate than in previous months. Export demand continued to weaken, particularly from U.S. and European markets, contributing to the overall decline in new business.

Despite the downturn, the outlook for future production improved, with the future output index reaching its highest point since March. Confidence among manufacturers was buoyed by expectations of recovering European markets, new products and investment in sales teams.

Employment in the sector saw its sharpest decline since May, however, as firms continued to reduce staff in response to a lack of incoming new work as backlogs shrank. Input prices fell for the second time in three months, while output prices were raised slightly.

"Operating conditions at Polish manufacturers continued to worsen in August," said Trevor Balchin, Economics Director at S&P Global Market Intelligence. "The main positive from the latest survey was a further recovery in the forward-looking future output sub-index."

The PMI data highlights ongoing challenges for Poland's manufacturing sector, though signs of a potential recovery in future output provide some optimism.

(Reporting by Karol Badohal; Editing by Toby Chopra)