INSTANT VIEW 3-Czech Dec PMI signals further improvement

                                
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 PRAGUE, Jan 4 (Reuters) - The Czech Purchasing Managers'
Index (PMI) held in positive territory a second consecutive
month in December, with a manufacturing recovery gaining
traction, Markit Economics data showed on Monday.
                                
 Manufacturing PMI crept up to 50.9, from 50.6 in November.
The overall improvement in business conditions was underpinned
by a fifth straight monthly increase in new orders, though at a
more modest rate than in previous months, the data showed.
                                
 Output was also above the neutral 50 mark that splits
contraction from growth for the fifth month, although the figure
was lower from November's. Backlogs were accumulated for the
third month running.
                                
 Suppliers' delivery times was also in positive territory,
while the remaining two categories -- employment and stocks of
purchases -- were negative.
                                
 Czech manufacturers continued to shed jobs in December,
continuing a trend seen in last year and a half, but the overall
rate of decline in employment slowed to the weakest since August
2008.
                                
 Companies also continued to adjust capacity to lower than
levels seen before the economic crisis, citing cost saving
measures.
                                
 The crown <EURCZK=> was roughly flat after the data at
26.3534 per euro.

****************************************************************
KEY POINTS:                       12/09      11/09     12/08
Purchasing Managers' Index        50.9       50.6       32.7
Output                            52.1       53.2       27.4
(For table, double click on......................[ID:nPRA004904]
- A figure above 50 indicates expansion on the previous month
while a number below 50 signals contraction.
 
                                
 ANALYST COMMENTS:
                                
 RAFFAELLA TENCONI, CHIEF ECONOMIST, WOOD & CO.
                                
 "The summary number is up slightly, which is positive,
showing an expansion. But the trend is signalling that it's
quite a slow expansion."
                                
 "Rather, the Czech economy is being held back by the usual
suspects, which is still a fairly strong currency and slow
export recovery, when you compare it with Poland, which has more
of a competitive edge at this point the cycle. But it's still a
positive story."
                                
 
                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "The data shows an improvement in the condition of the Czech
economy which was already indicated by the industrial output
data released last week. It will likely be confirmed also by the
foreign trade data this week."
                                
 "It can be expected that in the following months this index
will rise as the recovery continues."
                                
 "The brake is mainly the unemployment indicator, while
foreign orders are the main reason behind the improvement in
this indicator."
                                
 
                                
 PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
                                
 "The positive news is the index maintained above the 50
level, and there is also a slight rise. The story is in line
with expectations of a gradual recovery in manufacturing --
nothing extraordinarily good but still the recovery is ongoing."
                                
 
KUBILAY OZTURK, ECONOMIST for EMERGING EUROPE at HSBC
                                
 "The headline index improved slightly and remained above the
break-even level for the second month running in December,
providing further evidence of recovering business conditions in
the Czech manufacturing sector."
                                
 "External demand remains supportive, although below
historical standards. A strong December Eurozone PMI suggests
export performance may improve somewhat before the impact of
fiscal stimulus packages fades completely in the first half of
2010."
                                
 
BACKGROUND:
- Report on last Czech c.bank rate decision.......[ID:nDE5BF128]
                                
[ID:nPRG003844] [ID:nDE5BF161] [ID:nPRA004895] [ID:nDE5BM155]
- October foreign trade figures..................[ID:nGEE5B6074]
- October industrial output........................[ID:nG435293]
                                
                                               [ID:nDE5BD06Z]
- November preliminary industrial output.........[ID:nLDE5BT03J]
- Third-quarter GDP data......................... [ID:nLD453462]

LINKS: 
- For LIVE Czech economic data releases, click on       <ECONCZ>
- Instant Views on other Czech data                 [CZ/INSTANT]
- Overview of Czech macroeconomic indicators            [CZ/ECI]
- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH]
- For Czech money markets data click on                <CZKVIEW>
- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

                                
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 (Reporting by Mirka Krufova)