The Czech and Hungarian economies both entered technical recession in the second half of last year and are expected to remain sluggish in the beginning of 2023. Poland's economy, the biggest in central Europe, is also off to a slow start to the year after a fourth-quarter contraction. Tuesday's PMI data offered some signs of stabilisation in the manufacturing sector, with slowing rates of decline. Cost inflation was its lowest level in over two-and-a-half years. "But it will be difficult to achieve a significant improvement in the economic situation in industry, at least in the coming months," Bank Millennium said. "Still high inflation in Poland and abroad and the impact of high interest rates should keep demand at a low level." The Czech survey also saw costs rise less sharply than previously, and the rise in selling prices was the softest in two years. But the fall in orders gathered pace, while firms also reported order postponements, according to the survey. In February, Toyota's Czech plant temporarily stopped production, and the biggest carmaker, Skoda Auto of the Volkswagen group, cut some shifts. That will impact production, and the car industry association estimated at the beginning of last month that up to 25,000 fewer cars would be produced in February alone. However, recovery in manufacturing is seen this year as export markets pick up. "Despite the pessimistic tone of PMI, we expect conditions to begin to improve in the second half of the year," Raiffeisen said. "We expect the euro zone economy will gradually pick up pace, which will show up in foreign orders." (Reporting by Jason Hovet in Prague and Alan Charlish in Warsaw Editing by Mark Potter)
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March 1 (Reuters) - The Polish and Czech manufacturing
sectors remained stuck in contraction in February amid sagging
orders, although bright spots appeared as cost pressures eased,
surveys showed on Wednesday.
S&P Global's Polish manufacturing Purchasing Managers' Index
(PMI) rose to 48.5, above expectations, from 47.5 in January,
remaining below the 50 mark that separates growth from
contraction.
The Czech PMI eased to 44.3 from 44.6 in January.
Hungary's PMI, prepared under different methodology by the
Association of Logistics, Purchasing and Inventory Management
(MLBKT), rose to 56.5 in February from 55 in January, holding
onto to growth as an outlier in the region.
Central Europe's economies have been slowing rapidly since
the last half of 2022 as decades-high inflation hammers
consumers, while companies have seen shrinking order books.
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