Central European manufacturing activity continued its steady recovery in the Czech Republic in July and rebounded in Poland while the outlook for Hungary turned negative, data released Thursday showed.
Data gleaned from purchasing managers index surveys across the region give an indication of how well its three main export-driven economies are performing.
“Prospects for CE3 economic recovery remain fragile but are improving,” said Prague-based analyst Jaromir Sindel of Citigroup, referring to the region’s three economies.
The Polish outlook underscored hopes that the region’s largest economy by population may still avoid slipping into the recession its neighbors are suffering to varying degrees. Poland is among a few European countries to have continued growing throughout the financial crisis, albeit at a sharply slower rate in the last year or so.
Czech July PMI was a higher-than-expected at 52 compared with 51 in June, its fourth straight monthly increase. Analysts polled by Dow Jones Newswires expected 51.8 on average. A figure above 50 suggests manufacturing activity is increasing while a reading below signals contraction.
“The (Czech) manufacturing PMI index stood above the 50 points threshold for the third consecutive month in July and shows that growth is gaining momentum,” HSBC economist Agata Urbanska said. The latest reading was just below the country’s long-term average index of 52.3, she said.
Poland’s manufacturing sector showed solid signs of a recovery last month with PMI rising to 51.1 from 49.3 in June, its highest since 2012, said Ms. Urbanska.
“The (Polish) month-on-month uptick in the headline figure was the second-largest in 44 months,” she said.
On the negative side, Hungary’s PMI fell to 49 from 50.8 because of declining new orders, which gave their second-lowest July reading since the PMI survey began in 1995.
Nevertheless, the PMI reading for Hungary’s all-important export sector rose.
There were no analyst forecasts for Polish and Hungarian PMI in July.
The Czech and Polish PMI surveys are compiled by HSBC’s Markit Economics. Hungarian PMI data comes from the country’s association of logistics, purchasing and inventory management, or MLBKT.
The figures are based on several key factors, including new company orders, inventory levels and employment.
Poland’s economic growth slowed to 0.5% on the year in the first quarter from 0.7% year-on-year growth in the previous quarter and well below growth of above 4% in 2011.
The Czech economy contracted 2.4% in the first quarter as the country continued to battle the recession it has suffered since late 2011. The latest PMI data confirms the Czech Finance Ministry’s hopes of a recovery later this year.
Hungary’s economy contracted 0.9% in the first quarter having shrunk 1.7% in 2011. The July PMI reading may cast doubt on the durability of the country’s recovery, some analysts say.
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