INSTANT VIEW 2-Czech PMI breaks above 50, employment still down

                                
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 PRAGUE, Dec 1 (Reuters) - Czech manufacturing crept up to
positive territory for the first time in more than a year in
November with an increase in production and new orders, data
showed on Tuesday.
                                
 Manufacturing PMI crept up to 50.6, from 49.8 in October,
above the neutral 50 mark that demarcates the border between a
rise and a fall after 16 straight months of lower readings,
Markit Economics data showed on Tuesday.
                                
 Production in the Czech manufacturing sector rose for the
fourth month running in November. Higher production volumes were
reflected in a rise in backlogs of work. Outstanding business
has increased in each of the past two months, and the latest
rise was the strongest since July 2008.
                                
 New orders also rose for the fourth month in a row. Incoming
new business increased in both domestic and export markets, with
demand slightly stronger from abroad.
                                
 Employment declined for the 17th month in succession, but
the rate of job shedding eased further to its slowest since
September 2008.
                                
 
                                
 The crown <EURCZK=> strengthened to xx.xxx, from 26.05
before the data.
****************************************************************
KEY POINTS:                       11/09      10/09     11/08
Purchasing Managers' Index        50.6       49.8       37.8
Output                            53.2       52.0       36.7
(For table, double click on....................[ID:nPRA004868]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
 
COMMENTARY:
KUBILAY OZTURK, ECONOMIST FOR EMERGING EUROPE AT HSBC      
                                
 "The headline index finally crossed the break-even level in
November, heralding the advent of a long-awaited recovery in
business conditions in the Czech manufacturing sector. 
                                
 "Output and new orders continued to advance over the month,
providing further evidence of better demand conditions, while
the lack of a meaningful expansion in new export orders partly
reflects the fading influence of fiscal measures and scrappage
schemes in Western Europe, underlining the fragile nature of the
recovery. 
                                
 "An accelerated decline in output prices points to the
absence of inflationary pressures for a prolonged period;
however, further monetary easing is unlikely given considerable
uncertainty about the impact of further cuts and recent currency
weakness."
                                

                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "For the first time since the crisis started we are above
the 50 point level, which is supporting optimism about the
future of the Czech economy. If we look at other figures, like
new orders, it is improving, and also employment is slightly
improving. So it seems that not only PMI as a whole, but also
lagging indicators are improving."
                                
 "Together with (industrial output) data released yesterday,
I would say we are out of the woods. Now it is up to Germany and
other west European countries to help central and east European
countries to improve performance through rising exports."

                                
 BACKGROUND:
- Report on last Czech c.bank rate decision.......[ID:nL4183884]
                                
 [ID:nPRG003761] [ID:nL5208270 [ID:nL5527536] [ID:nPRA004836]
- September foreign trade figures.................[ID:nL6542741]
- September industrial output.....................[ID:nLB708141]
                                
                                               [ID:nLU706508]
- October preliminary industrial output..........[ID:nPRA004866]
- Third-quarter GDP data......................... [ID:nLD453462]

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- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

                                
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 (Reporting by Jan Lopatka)
((prague.newsroom@thomsonreuters.com; +420 224 190 477; Reuters
Messaging: mirka.krufova.reuters.com@reuters.net))