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UPDATE 1-CEE ECONOMY-Manufacturing growth loses some momentum in August

reuters.com · 09/01/2021 05:28
UPDATE 1-CEE ECONOMY-Manufacturing growth loses some momentum in August

Adds analyst comments, graphic

By Jason Hovet

- Central Europe's manufacturing sector remained firmly on a growth path in August but the expansion continued to slow from a previous record pace amid capacity constraints, surveys showed on Wednesday.

IHS Markit's Purchasing Managers' Index (PMI) for Poland fell to 56.0 in August, from 57.6 in July and below analysts' expectations while remaining well above the 50.0 line that separates growth from contraction. nZRN002P9S

Markit's Czech PMI survey slowed to 61.0 in August from 62.0 in July. Hungarian PMI, published by the Association of Logistics, Purchasing and Inventory Management, edged up slightly to 55.9 in August, from 55.8. nZRN002P9V nS8N2MT055

Manufacturing sentiment has slipped from record levels in the past two months but remains strong despite this, with Poland's August PMI reading the fourth highest since 2010.

"The wave of recovery in European industry is continuing, which is visible in PMI survey results around central Europe and also western Europe," said Radomir Jac, chief economist for Generali Investments CEE.

But disruptions are still being seen. In Poland, the PMI showed new orders at a four-month low. In the Czech Republic, the output component of the survey eased amid capacity shortages and delays in materials shipments.

Supply bottlenecks also drove PMI in Germany, the region's strongest trading partner, to a six-month low. nZRN002PA5


Constraints across the region have been most evident in the car sector. On Tuesday, Japanese carmaker Suzuki said it would halt production at its factory in Hungary for two weeks in September due to a global shortage of microchips. nL1N2Q21HV

However Capital Economics said supply disruptions may have already passed the worst according to the PMI data.

"We think it will take months for supply conditions to normalise, but it offers encouragement that industry will be able to maintain a strong recovery in the second half of the year," Capital Economics' emerging markets economist Liam Peach said in a note.

Manufacturing has buoyed central Europe's economies during the coronavirus pandemic. After some plants idled at the outset of the pandemic in early 2020 - which hammered economic output - companies have been able to keep running.

Now with restrictions on retail and hospitality being lifted during the second quarter, economic growth is taking off.

Hungary's economy soared 17.9% year-on-year in the second quarter, updated statistics office data showed on Wednesday.

Hungary also saw a 2.7% rise quarter-on-quarter, ahead of Poland's 2.1% and the Czech economy's 1.0%. nS8N2MT056 nL1N2Q20JY

CEE Manufacturinghttps://tmsnrt.rs/3mLhXEC

(Reporting by Jason Hovet and Mirka Krufova in Prague, Alan Charlish in Warsaw and Gergely Szakacs and Anita Komuves in Budapest; Writing by Jason Hovet
Editing by Gareth Jones)

((jason.hovet@thomsonreuters.com; +420 234 721 613;))