Poland's manufacturing activity continued to contract slightly in March as muted demand, both domestic and from Western Europe, ate into production, a survey showed on Tuesday.

S&P Global's Polish manufacturing Purchasing Managers' Index (PMI) inched up to 48.0 in February from 47.9 in February, remaining below the 50.0 line that separates growth from contraction for the 23rd month in a row. Analysts polled by Reuters had expected a reading of 48.1.

Weak order books were the main cause for a reduction in production volumes across the manufacturing sector in March, according to the survey.

"Poland's manufacturers are being stifled by weak eurozone demand, particularly from Germany and France," Trevor Balchin, economics director at S&P Global Market Intelligence, said in a statement.

"Output, new orders and exports continued their record-long downturns, with the rates of decline showing little sign of easing."

He noted that price pressures remained weak, with input prices only marginally higher than in February and output prices falling for the 12th straight month.

While input prices increased marginally as suppliers passed on higher production costs, factory gate charges showed a sustained decline, with the price discounting rate accelerating to its fastest since October 2023, according to the survey.

Sector-wide subdued demand led to another decline in backlogs of work, with goods makers reporting a fall in unfinished business during each month since June 2022.

Still, total workforce numbers fell at the second-slowest pace in the past 22 months and some firms noted additional recruitment in support of new product launches and long-term business expansion plans, according to the survey.

Goods producers remained optimistic about the next 12 months, though the degree of confidence slipped to its lowest so far in 2024 owing to weak sales pipelines and worries about the broader economic outlook. (Reporting by Karol Badohal; Editing by Hugh Lawson)