CEE ECONOMY-Polish, Czech manufacturing contractions stabilise in February

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.

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. "Both new orders and production continued to decline, but did so at slower rates, whilst cost inflation, which has been a key feature of the downturn, shifted down noticeably to its lowest level in over two-and-a-half years," said Paul Smith, economics director at S&P Global Market Intelligence. 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. (Reporting by Jason Hovet in Prague and Alan Charlish in Warsaw Editing by Mark Potter)