* Polish Nov PMI hits 20-month high []
* Czech PMI also enters positive territory []
* Hungarian PMI, different method, falls to 47.5 in Nov
By Gareth Jones
WARSAW, Dec 1 (Reuters) - The Polish and Czech manufacturing
sectors grew in November for the first time in more than a year,
data showed on Tuesday, but economists said the recovery still
hinged on prospects for the euro zone and could prove bumpy.
In Poland, the European Union's biggest ex-communist
economy, the Purchasing Managers' Index (PMI) <PLPMI=ECI> jumped
to 52.37 points in November, hitting a 20-month high in the
sector's first expansion in 19 months. It was 48.8 in October.
Czech PMI rose to 50.6 in November from 49.8 in the previous
month, buoyed by increases in both production and new orders.
A figure above 50 in the index indicates expansion.
But tighter state budgets, the continued reluctance of banks
to lend and the end of stimulus measures like Germany's car
scrap subsidies are all expected to hamper the once-booming
region's emergence from the global financial crisis.
"All told, these PMI readings are definitely good news, a
sign that recovery is underway. But any hope that we will get
back to pre-crisis growth rates will be dashed," said Neil
Shearing of London-based Capital Economics.
"It will take time to return to potential growth."
In Hungary, which compiles PMI with a different methodology,
the seasonally-adjusted figure slipped to 47.5 in November from
a revised 48.3 in October, the Association of Logistics,
Purchasing and Inventory Management said.
Hungary remains mired in its worst downturn in almost two
decades and tangible growth is not expected before 2011.
EXPORTS
With governments across the region seeking ways to slash
bulging budget deficits, exports will have to carry much of the
burden for the recovery and conditions in key markets in the
euro zone remain challenging, economists say.
The euro zone's own PMI inched up to 51.2 in November, its
highest level since March 2008 and the second consecutive month
that it has been in positive territory, driven largely by a
rebound in Germany, France and Italy.
But euro zone members also must rein in their public debt
and budget deficits as the recovery gathers momentum.
Economists say at least some of the recovery now seen in
ex-communist central Europe is linked to the short-term
rebuilding of inventories which will fizzle out in the new year.
After the PMI data, the Polish zloty led gains in central
European currencies, gaining about 1 percent against the euro to
4.1240, but dealers said improved global sentiment was the main
factor behind the rebound in the region's units.
Poland, the only EU member state to avoid recession during
the global financial crisis, saw new orders in November reach
their highest level since February 2008. New export orders
reached a 27-month peak, helped by a weaker zloty.
Data released on Monday showed Poland's gross domestic
product grew by 1.7 percent in the third quarter, more than
analysts had forecast, thanks to its large internal market of 38
million, resilient private consumption and inflows of EU funds.
After Monday's data some analysts suggested they could raise
their growth forecasts. In the latest Reuters poll in November
analysts expected gross domestic product (GDP) to rise by 1.2
percent this year and by 2.0 percent in 2010.
"(Today's PMI reading)... strengthens our view that Poland's
industrial output and GDP growth will be strong in the fourth
quarter. We expect GDP growth to reach 3 percent," said Marcin
Mrowiec, chief economist at Pekao bank in Warsaw.
In the Czech Republic, which is much more reliant on
overseas demand than Poland, production in the manufacturing
sector rose for the fourth month running in November.
Incoming new business increased in both domestic and export
markets, with demand slightly stronger from abroad. Employment
fell again but the rate of job shedding eased to its slowest
pace since September 2008.
(Additional reporting by Reuters bureaus; editing by Patrick
Graham)
((gareth.jones@reuters.com; +48 22 653 97 22; Reuters
Messaging: gareth.jones.reuters.com@reuters.net))
