* Polish November PMI hits 6 1/2-year high of 55.9
* Czech figure creeps up to 57.3
* Hungarian PMI jumps to 54.9, from 51.5
By Michael Winfrey
PRAGUE, Dec 1 (Reuters) - Industry in the European Union's
emerging east continued to ride the wake of an accelerating
German recovery in November, expanding in export-driven Hungary
and the Czech Republic and in regional growth-leader Poland.
The purchasing managers index (PMI) data prompted analysts
to predict solid full-year 2010 growth and a continued strong
recovery into the start of next year, but warn that a slowing
global recovery would block aggressive rate tightening.
Poland's Purchasing Managers' Index (PMI) <PLPMI=ECI> rose
to 55.9 points in November, the third highest result ever, while
the output reading rose to a 79-month high, data from Markit
Economics showed on Wednesday.
The Czech PMI crept up to 57.3 from October's 57.2, mainly
on new orders, and well above its long-run average of 52.5.
The data coincided with a strong showing for Germany, the
biggest end-destination for Polish, Czech and Hungarian exports,
where growth in new orders and the fastest job creation since
2008 pushed its PMI to 58.1.
"It's good news. It seems to be that for now at least, the
strength in the German surveys is being mirrored in the central
European surveys," said Neil Shearing, an economist at
London-based Capital Economics. "There does not seem to be too
much trouble on the immediate horizon."
Other data showed German retail sales rose at their fastest
pace in almost three years, an indication that the recovery in
2009 and earlier this year had gained traction among consumers.
Hungary's seasonally-adjusted PMI <HUPMI=ECI>, calculated
under different methodology, jumped to 54.9 in November, from a
revised 51.5 in October.
Markets were little changed by the data, with the Czech
crown <EURCZK=D2> and Polish zloty <EURPLN=D2> down 0.12 percent
from Tuesday's close, and the Hungarian forint roughly flat.
POLICY TIGHTENING?
Poland, the only EU country to avoid a recession during the
economic crisis, saw annual economic growth of 4.2 percent in
the third quarter, renewing expectations of monetary tightening.
Following a series of comments from Polish central bankers
suggesting a hike is imminent, many analysts say a 50 basis
point increase could happen in December or January.
But they added that, even though Hungary hiked interest
rates on Monday, demand-side pressures remained very weak and
most countries still also have large output gaps, leaving little
room for a major shift towards monetary tightening.
"In Poland this is one more piece of evidence supporting the
fact that the recovery is robust, which adds to our view that
there is a case for 50 basis points in tightening early next
year," said Raffaella Tenconi, an economist at Bank of America.
"But none of these releases are really a convincing piece of
evidence that they immediately have to hike."
Shearing said market expectations the European Central Bank
could keep its liquidity operations unlimited would also prevent
much traditional monetary tightening among emerging EU states,
as a higher premium could spur unwanted currency appreciation.
"That will prevent any form of agressive normal monetary
tightening, even in Poland, where they have their finger on the
trigger," he said. "My view is the bulk of tightening will still
have to come outside of interest rates, like raising bank
reserves and macroprudential measures trying to make sure banks
rein in lending."
(Additional reporting by Roman Gazdik in Prague and Reuters CEE
bureaus; Editing by Catherine Evans)
