INSTANT VIEW 3-Czech July PMI dips from 3-year highs

                                
 PRAGUE, Aug 2 (Reuters) - The Czech Purchasing Managers'
Index (PMI) slipped to a four-month low of 56.8 in July from
57.6 in June, holding above the breakeven point for the ninth
month running, Markit Economics data showed on Monday.
                                
 The data for the Czech manufacturing sector, compiled by
Markit for HSBC, remained well above its historic average of
52.4 in July. A mark above 50 signals expansion.
                                
 The output component dipped on the month, hit by a slowdown
in new export orders that partly reflected a firming of the
crown currency <EURCZK=> against the euro, Markit said. Germany
and Russia were the main export markets cited by manufacturers.
                                
 
****************************************************************
KEY POINTS:                       07/10      06/10     07/09
Purchasing Managers' Index        56.8       57.6       43.4
Output                            59.8       60.1       45.8

(For table, double click on......................[ID:nPRA005163]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
 
MARKET REACTION: 
                                
 The Czech crown <EURCZK=> dipped to 24.78 to the euro from
24.76 before the data.
                                
 
COMMENTARY:
                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "There has been a certain slowdown in Czech PMI, similar to
the Polish one, perhaps in a little contrast to the data we got
from Germany, respectively the euro zone last week. 
                                
 "However I believe the value remains so high in the Czech
Republic and so high above the balance between growth and
contraction that there is nothing to worry about."
                                
 
                                
 PATRIK ROZUMBERSKY, ANALYST, UNICREDIT
                                
 "The performance in industry is nearing a peak, which
corresponds to our expecations that the second half of the year
will mean a stronger slowdown. In comparison with the first half
we expect the pace of growth to be half."
                                
 
                                
 JIRI SKOP, ANALYST, KOMERCNI BANKA
"Output is still high. The recovery in industry will slow
down but growth will still be there."
                                
 "It will be seen also in the euro zone because recovery was
based on inventory rebuilding and this impulse will be taken
off."
                                
 "So the recovery will slow and be led by demand more."
                                
 
                                
 KUBILAY OZTURK, ECONOMIST FOR EMERGING EUROPE AT HSBC
                                
 "Expansion of output appears to have slowed slightly, mainly
on the back of an apparent drop in export orders... A stronger
koruna over the month may have played a role here."
                                
 "Notwithstanding the softening, the series has been
resilient so far this year, and together with July's upbeat
confidence indicators indicate the crisis conditions have
continued to ease."
                                
 "Increases in input and output prices continue to argue for
undisrupted normalisation of consumer and producer prices
ahead."
                                
 "On the rate front, although the impact of recent swift
koruna appreciation is likely be somewhat offset by cumulative
upward deviation in EUR/CZK compared with the central bank's
estimate of 25.2/EUR for the end of 2010, prolonged currency
strength may rekindle the bank's concerns over the
sustainability of the recovery."
                                
 "All in all, the Czech economy continues to diverge
favourably in the region. Positive surprises in July's EMU
manufacturing PMI and business climate in Germany suggest the
economy will maintain its sound footing in the near term."

BACKGROUND:
- Report on last Czech c.bank rate decision......[ID:nLDE65K1NV]
                                
              [ID:nPRG004247] [ID:nHJJ000030] [ID:nL71022443]
- May foreign trade figures......................[ID:nLDE666086]
- May industrial output..........................[ID:nLDE668072]
- First-quarter GDP data.........................[ID:nLDE658063]
                                
                                              [ID:nLDE6580EJ]

LINKS: 
- For LIVE Czech economic data releases, click on       <ECONCZ>
- Instant Views on other Czech data                 [CZ/INSTANT]
- Overview of Czech macroeconomic indicators            [CZ/ECI]
- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH]
- For Czech money markets data click on                <CZKVIEW>
- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

                                
 ** Index copyright and database rights owned by Markit:
unlicensed copying strictly prohibited ** 
                                
 Detailed PMI data are only available under licence from
Markit and customers need to apply to Markit for a licence. For
further information please phone Markit on ++ 44 20 7260 2454.
                                
(Reporting by Mirka Krufova and Jason Hovet; editing by John
Stonestreet)