* Czech August PMI rises to 57.3, from 56.8 in July
* Polish PMI <PLPMI=ECI> at 37-month high of 53.8
* Hungarian PMI, different methodology, slips to 51.9
By Michael Winfrey
PRAGUE, Sept 1 (Reuters) - A surge in new orders boosted
manufacturing in the European Union's biggest emerging economies
in August, adding jobs and fuelling growth on the back of a
better-than-expected recovery in economic powerhouse Germany.
Industry in Poland and the Czech Republic, whose car,
electronics, and other industrial producers are crucial
suppliers for German exporters, has expanded around 10 percent
or more for most of this year due to strong demand from Asia.
Analysts say a sputtering U.S. recovery and a change in tack
by EU countries from economic stimulus to budget cutbacks will
probably weigh down that expansion at the end of this year, but
manufacturers showed few signs of slowing last month.
The Czech Purchasing Managers' Index (PMI) rose to 57.3 in
August from 56.8 in July, holding above the breakeven point for
the tenth month running, research firm Markit said on Wednesday.
Polish PMI <PLPMI=ECI> rose to a 37-month high of 53.8
points, and the output reading grew to its highest level since
June 2006.
A number above 50 indicates expansion and below 50
contraction. Economists said the strong data was clearly tied to
growth in Europe's largest economy Germany, which grew at 2.2
percent in the second quarter, its fastest level since the
reunification that followed the fall of communism.
"With the very strong numbers out of Germany, the regional
growth is well supported. There's no double dip. There's no
slowdown present in the third quarter," said Barclay's Capital
economist Daniel Hewitt. "It doesn't rule out something later
down the line... but they're holding in there fine."
Hungarian PMI <HUPMI=ECI>, compiled under different
methodology, fell to 51.9 in August, from 53.5 in July.
Other data showed Hungary's imports rose by 20.9 percent in
June versus a year earlier, while exports were up by 24.5
percent. Domestic demand remains depressed in one of the
countries forced to seek IMF aid after 2008's financial turmoil.
The region's currencies gained slightly. The Polish zloty
<EURPLN=> was 0.15 percent stronger while the forint <EURHUF=>,
which led losses on Tuesday, gained 0.2 percent after easing
briefly following the PMI decline. []
FOLLOWING GERMANY
Manufacturing activity in the euro zone, however, expanded
in August at its slowest pace since February as the pace of
recovery among member countries diverged. []
German manufacturing PMI slowed to 58.2, from 61.2 in July,
but remained well above the 50-point break-even level.
Although the Polish zloty <EURPLN=> and Czech crown
<EURCZK=> have appreciated 2.5 and 6.0 percent against the euro
this year, they are still well below pre-crisis levels, a fact
that has made exports cheaper and helped fuel growth.
Poland is also surfing a strong wave of demand from
38-million domestic consumers, the main reason it was the only
EU state to avoid contraction last year and showed 3.5 percent
growth in the second quarter.
Analysts said although PMI remained well above the border
marking expansion, all countries but Poland were still showing
limited signs that the manufacturing surge was filtering into
domestic economies.
That was illustrated by data from Romania. Like Hungary,
which has enacted cost-cutting reforms as part of a 20 billion
euro EU and International Monetary Fund deal, it is suffering
from weak domestic demand, which shrank 0.7 percent year-on-year
in the second quarter.
That is not expected to spill over into stronger
industry-heavy states like the Czech Republic, whose exports
equal around 75 percent of economic output.
But with governments in the euro zone -- eastern Europe's
main export market -- embarking on cost cutting reforms to rein
in big debt piles and slash wide budget deficits next year,
economists said a slowdown could be around the corner.
"I am slightly worried about development in the coming
months," said David Marek, chief economist at Prague-based
Patria Finance. "Europe may also experience a slowdown similar
to the United States. Europe cannot hold growth alone, because
demand in EU countries... remains relatively weak."
(Reporting by Michael Winfrey; editing by Patrick Graham)
