* Polish February PMI up to 52.4, from 51.0 in January
* Czech PMI rises to 54.3, from 53.1
* Hungarian PMI increases to 55.9, from 53.8
* Unemployment still weighs, German recovery crucial
By Michael Winfrey
PRAGUE, March 1 (Reuters) - Manufacturing rose in the
European Union's core emerging economies in March, raising hopes
of recovery, although shaky demand in Western Europe continues
to indicate that recovery will be bumpy.
The purchasing managers' index (PMI) in Poland, the EU's
largest ex-communist economy, rose to 52.4 in February from 51.0
the previous month, with output, new orders, and exports all
picking up speed.
It was a rebound from a three-month low in January, and the
output index showed the fastest rate of expansion since
November, the data from HSBC and Markit economics showed.
"Companies increased their purchasing at the fastest pace in
nearly two years, which bodes well for sustaining a wide-scale
recovery," Kubilay Ozturk, an economist for emerging Europe at
HSBC, said of the Polish data.
"More jobs were shed, however, after an increase in
December, indicating the possible downside risks for private
consumption associated with the lagging response of the labour
market."
The Czech PMI rose to 54.3, from 53.1 in January, the
strongest overall growth of manufacturing since March 2008.
The Czech employment component rose above the 50 mark that
divides expansion from contraction in February for the first
time since June 2008, but the survey said firms that took on
more staff were offset by cuts at other companies.
Hungary's PMI, compiled under different methodology than the
HSBC/Markit data, rose to 55.9, from a revised 53.8 in January.
PMI is an index used to measure manufacturing strength from
five components: output, unemployment, new orders, employment,
delivery times and stocks of purchases. A number above 50
signals expansion, while one below 50 signals contraction.
MIXED PICTURE
The data helped boost markets across the region, with
Poland's zloty rising 0.3 percent to a 15-month high against the
euro and the Czech and Hungarian currencies posting slight gains
of 0.2 and 0.1 percent. []
Poland's large internal market of 38 million people helped
it become the only EU economy to avoid a contraction last year,
but the Czechs, Hungarians and other export-driven countries in
central Europe are depending on a rebound in Germany, the main
destination for their manufactured goods.
That may be tricky, after Germany's closely watched Ifo
business sentiment survey unexpectedly fell []
[] in February, raising the possibility that the
euro zone's largest economy could contract in the first quarter.
There was some encouraging news on Monday, however, as a
German PMI rose to its highest level since June 2007.
[]
In the Czech Republic, low household demand is also expected
to drag on growth and the central bank expects the jobless rate
to peak in the first quarter of 2011 at more than 10 percent.
"The overall picture now is rather mixed," said David Marek,
chief economist at Prague-based Patria Finance.
"Data coming from the euro zone are more negative then they
were in past months, so despite the growth in PMI I think it is
necessary to remain cautious as for optimism in coming months."
Poland has a potentially similar challenge. Manufacturers
there continued to reduce their workforces in February, albeit
at a slower pace than during the previous month.
A Polish labour ministry official said last month that
unemployment had probably jumped to above 13 percent in February
-- potentially threatening a recovery in private consumption.
Neil Shearing, an economist at Capital Economics, said
expectations of fiscal tightening, rising unemployment, a
potential export slowdown in the euro zone, and banks' continued
reluctance to lend all signalled a slow crawl back to growth
levels seen before the global economic crisis.
"There's nothing here to suggest a change in our view that
there will be a long, drawn-out recovery that will eventually
disappoint," he said.
(Additional reporting by Warsaw and Budapest; Editing by Susan
Fenton)
