ECO ECONOMY-Czech and Polish PMIs set new records as Central Europe recovers
Band Jason Hovet
July 1 (Reuters) – Czech and Polish manufacturing activity increased to a Record pace for the second consecutive month in June as orders increased and economies reopened after closures to curb the COVID-19 pandemic, indicating a rapid recovery in central Europe.
The IHS Markit Purchasing Managers Index (PMI) for Poland rose to 59.4 in June, higher than expected and breaking a previous record of 57.2 set in May. data released Thursday.
The Czech PMI reached 62.7 in June. Hungary‘s PMI, from another publisher, rose to 54.7, comfortably above the 50 mark between expansion and contraction.
Good PMI readings over the past few months have given hope that the Central European economies are on the path to a solid recovery.
But they also show the stresses factories face as pandemic disruptions persist, with global component shortages and transportation bottlenecks driving up costs..
Labor shortages are again appearing and adue to strong inflationary pressures in the region, which last week prompted the Hungarian and Czech central banks to return to hike interest rates.
“Manufacturing PMIs continue to paint a bright picture of the recovery underway, aided by the easing of foreclosure restrictions and the partial release of pent-up demand accompanying the economic reopening, âErste Group Bank said.
“The recovery is expected to continue well in (Q3), but the current supply side issues and cost pressures are not expected to dissipate quickly.”
The shortage of materials is more visible in the automotive industry and a lack of semiconductors. In the Czech Republic, the economic leader Skoda Auto, which is part of the Volkswagen group VOWG_p.DE, had to stop part of the production and reduce the teams.
Polish order books have grown at the fastest pace since 2003, according to PMI data. Shortages of raw materials and transportation problems have also pushed input and output prices to record highs.
TThe components of the pipes have “artificially” increased the overall PMI although the recovery picture remains intact, as the pandemic situation has improved in the region with a drop in infections and an increase in vaccinations.
The Czech central bank said last week that the improved pandemic outlook would help a faster recovery. Hungary’s central bank forecasts growth of 6.2% in 2021.
The two central banks last week became the first in the European Union to raise interest rates since the pandemic began in early 2020. bank, however, has says it’s too early for a stricter policy.
(Reporting by Jason Hovet and Jan Lopatka in Prague, Alan Charlish in Warsaw and Gergely Szakacs in Budapest; editing by Catherine Evans and Kim Coghill)
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