* Czech Dec PMI rises to 58.4, from 57.3 in November
* Polish PMI ticks up to 56.3, from 55.9, 3rd highest ever
* Hungarian PMI, different methodology, at 52.9, from 54.8
By Michael Winfrey
PRAGUE, Jan 3 (Reuters) - Rising new orders and a surge in
exports to Germany and other central European states boosted
Czech and Polish manufacturing in December, raising hopes the
region may avert a 2011 slowdown expected by some economists.
Following near record output data in Germany's private
sector in December -- contrasting with weak demand in the rest
of the euro zone -- the Czech Purchasing Managers' Index surged
to 58.4, from 57.3 in November.
Polish PMI also rose, to 56.3, from 55.9, its third highest
ever. Any figure above 50 indicates expansion, while numbers
below 50 signal contraction in industry.
Both countries saw export orders surge higher -- a factor
especially important in the Czech Republic, where exports
account for 60 percent of economic output. []
"The data fits into the picture of positive macroeconomic
information both at home and abroad. It seems that concerns over
the return of recession have ended conclusively," said David
Marek, chief economist at Prague-based Patria Finance.
"This year may not see such fast growth as last year... but
it will still be growth."
The strong performance of Germany -- the region's biggest
export market -- is easing concern that the end of inventory
rebuilding and continued weak investor demand in the European
Union's eastern wing could squeeze growth.
Poland, the region's largest economy, is also expected to
rank among the EU's growth leaders this year. As a whole, its
data pointed to the steepest growth trend since the middle of
2004 and beat analysts expectations that the index would fall to
55.5.
The Czech government expects austerity cuts and an expected
end to restocking by companies at home and abroad will slow
economic growth to 2.0 percent this year, versus 2.2 percent in
2010.
The Czech crown posted modest gains after the data but the
zloty was unmoved -- with volumes undermined by the absence of
London players due to a holiday. []
POLISH RATE HIKE
In Poland, one of the only EU members that has avoided
significant public cost cutting ahead of an election planned for
this year, the government expects growth to slow to 3.5 percent
in 2011, from up to 4 percent last year.
Rafal Benecki, senior economist at ING Bank Slaski in
Warsaw, said a rise in value added tax and other factors could
dampen consumption somewhat, but that rising exports and overall
demand were solid.
That could prompt the central bank's monetary policy
council, which has been trying to balance expectations of rising
inflation and the effects of a strengthening zloty currency, to
hike interest rates this month.
"Data from Poland still causes a positive balance of
activity," he said. "This is one of the elements, though not the
most important, arguing for a rate increase of 25 basis points
in January."
PMI in export-heavy Hungary, calculated under different
methodology, fell to 52.9 in December, from a revised 54.8 a
month earlier.
Output, new orders and exports, among other sectors, stayed
solidly above the 50-point break even level, but the latter two
categories showed drops of 4.6 points, while employment was down
1.9 points to 54.4. []
Analysts said, however, that the effects of tax cuts later
this year could lead to better performance.
"We should see confidence in the manufacturing sector
gradually strengthening as tax changes and investment projects
improve the growth outlook this year," market comment service
4CAST said in a note.
