Central Europe factory jump shows recovery gaining pace

Mon Sep 2, 2013 7:32am EDT
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By Jason Hovet

PRAGUE (Reuters) - Factories across central Europe reported growth in output and new business in August, a recovery in the region gaining strength in the wake of an improving German economy.

Purchasing managers indices beat forecasts in Poland and the Czech Republic and also rose in Hungary, survey data showed on Monday.

In Poland, the main HSBC manufacturing PMI index rose to 52.6 from 51.1 a month ago, the fastest expansion in over two years. The Czech index jumped to 53.9, above a forecast of 52.7.

Hungary, which uses a different index released by the Association of Logistics, Purchasing and Inventory Management, reported a jump to 51.7 from 49.0.

"The raft of manufacturing PMIs across central Europe for August provide further evidence that the region's recovery is gathering pace, helped by the improvement in the German economy," Capital Economics emerging markets economist William Jackson said.

"All in all, these surveys support our view that central Europe is set for a recovery over the coming quarters."

Central Europe is closely tied by trade links to Germany, by far Europe's largest economy, whose strong performance has a knock-on effect on the region.

Germany reported growth of 0.7 percent in the second quarter and recent data has provided further evidence it is bouncing back from a slowdown last year, which should bode well for its eastern neighbors.   Continued...

A worker moves a new Audi R8 car body in the automotive welding and assembly lines hall of the German car manufacturer's plant in Neckarsulm July 3, 2013. REUTERS/Michaela Rehle