INSTANT VIEW 3-Czech Jan PMI hits record high

                                
 PRAGUE, Feb 1 (Reuters) - The Czech Purchasing Managers'
Index (PMI) rose to a record high of 60.5 in January from
December's 58.4, beating the previous record of 59.5 set in July
2007 on the fastest growth of new orders in the survey's
history.
                                
 Both domestic and new export orders increased markedly, with
companies seeing the neighbouring German market as a key source
of demand. 
                                
 The output index rose for the second month running, to reach
the highest level since the series started in July 2001. The
latest growth extended the current sequence to 18 months.
                                
 Production growth was heavily attributed to improving market
conditions, both domestically and in export markets.
                                
 The new orders index posted its largest one-month gain since
April 2009, to reach a record high. Anecdotal evidence
highlighted strong demand for machinery and autos.
                                
 
****************************************************************
KEY POINTS:                       01/11      12/10     01/10
Purchasing Managers' Index        60.5       58.4       53.1
Output                            64.3       60.5       56.2

(For table, double click on......................[ID:nPRA005436]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
 
COMMENTARY:
                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "We can say that PMI faithfully follows what is happening in
the German economy, which is justified because the ties are very
strong, so the optimism of Czech companies is based on the
expected growth in export orders, which I think is justified...
due to the German data."
                                
 "The data also show that growth could be higher in the Czech
economy than previously thought. It would have to not slow down,
but perhaps accelerate more, at least in the first quarter or
the first half, and possibly in the entire year. We expect that
the Czech economy will grow by 2.8 percent this year."
                                
  "The implication for monetary policy is... that interest
rates should rise slightly earlier than the CNB stated in its
latest forecast, not in the end but in the middle of this year."
                                
 
                                
 VOJTECH BENDA, SENIOR ANALYST, ING COMMERCIAL BANKING
                                
 "It is another signal that industry is getting along, that
the economy is still in a period of relatively strong growth,
and that this growth is not slowing in the first quarter. We can
expect relatively strong GDP figures this year."
                                
 
                                
 MURAT ULGEN, HSBC CHIEF ECONOMIST, CENTRAL & EASTERN EUROPE
and SUB-SAHARAN AFRICA
                                
 "Czech manufacturing PMI rose to a record high of 60.5 in
January, suggesting that the improvement in manufacturing
conditions seen in the last quarter of 2010 has continued at an
accelerating pace into early 2011."
                                
 "The improvement in manufacturing output is being driven by
strengthening domestic demand, reflected in the sharp rise in
the new orders component to all-time highs versus a smaller
increase in new export orders." 
                                
 "The rapid expansion in new orders also led to an increase
in the backlogs of work as well as further lengthening in
suppliers' delivery times, both also arguing for strength in
demand, although the latter also indicates supply shortages."
                                
 "The re-acceleration in world trade activity also continues
to positively impact the domestic manufacturing sector with a
rise in the new export orders component."
                                
 "Manufacturers added to their labour force again in January
but at a slower pace than before. Inflationary pressures are
beginning to build up as well, with the commodity-driven rise in
input prices being increasingly passed on to consumers."
                                
 "Output prices rose sharply during the month to highs last
seen in mid-2008 and levels well above the historical average."
 
BACKGROUND:
- Report on last Czech c.bank rate decision......[ID:nLDE6BL1NL]
                                
                                              [ID:nLDE6BL0ZL]
- November foreign trade figures.................[ID:nLDE705058]
- November industrial output.....................[ID:nLDE70604R]
- Third-quarter GDP data.........................[ID:nLDE6B816Z]

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 (Reporting by Mirka Krufova and Jan Lopatka)