POLL-Czech output drop seen moderating in June

                                
 *What: industrial output flash estimate
                                
 *When: due by Aug 2
                                
 *Median forecast sees 17 percent y/y drop
                                
 By Mirka Krufova
                                
 PRAGUE, July 24 (Reuters) - The dive in Czech industrial
output may have slowed in June as key export market the euro
zone began to show signs of a recovery and thanks to calendar
effects, a Reuters poll showed on Friday.
                                
 Thirteen economists polled by Reuters between July 22 and
July 24 produced a median forecast for a 17 percent annual
decline, with the most pessimistic forecasting 20.4 percent
plunge and the most optimistic a 12.5 percent fall.
                                
 The Czech statistics bureau is expected to release a flash
estimate for June industrial output between July 28 and August
2.
                                
 The June number will show an eighth double digit tumble in a
row, illustrating how a lack of demand in the recession-hit euro
zone has been strangling Czech output, most of which is aimed
for exports to the West.
                                
 The Czech economy shrank by 3.4 percent in the first
quarter, and the Finance Ministry expects a 4.3 percent
full-year decline.
                                
 But analysts said the June reading could mark a turnaround
in the negative trend as better data coming from the euro zone
probably mean Czech industry has rebounded.
                                
 "First signs of stabilisation in output could appear based
on May data from France and Germany, both output and industrial
orders," said David Marek, chief economist at Patria Finance.
                                
 This year's June had one more working day than June in 2008
while May has one less working day this year compared with the
last year, another factor helping the June data, Marek said.
                                
 Jaromir Sindel, chief economist at Citibank in Prague, said
an improvement in German industrial activity along with the
temporary impact of a scrap subsidy in some EU countries should
help the Czech data.
                                
 The subsidy for buying new cars in turn for scrapping old
ones is key for Czech industry, heavily focused on cars and car
parts.
                                
 South Korea's automaker Hyundai Motor Co <005380.KS> said
earlier this month it would invest $183 million in its Czech
unit over the next two years to boost its gear unit production
as demand for its small, cheaper cars has picked up.
                                
 But Sindel said Czech orders have lagged the improvement in
confidence indicators such as the Purchasing Managers Index
(PMI), which was at a nine month high in June although still
below the critical 50 mark.
                                
 Radomir Jac from Generali PPF Asset Management said the
relatively bad Czech data compared with confidence surveys were
due to excessive inventories at companies.
                                
 "It is a question of time when Czech companies sufficiently
reduce their excessive inventories and level of de-stocking was
actually already very robust in previous months... Once
excessive inventories are reduced, industrial output should
start to report less negative results," Jac said.
                                
 Analysts agreed the pace of a decline in output would slow
further in the second half of the year as industrial production
in the small and open Czech economy reflects better the
improving trends in the euro zone.
 (Writing by Jana Mlcochova; Editing by Andy Bruce)