CEE ECONOMY-Manufacturing weighed down by Ukraine worries

Dec 1 (Reuters) - Polish and Czech manufacturing were in steep decline in November, surveys showed on Thursday, as orders fell due to inflation and economic uncertainty caused by the war in Ukraine.

The region’s businesses have been shaken by the conflict unfolding to their east, which has sent energy prices soaring and damaged confidence, leaving many with no choice but to cut jobs and output.

In the Czech Republic, the S&P Global Purchasing Managers’ Index (PMI) dipped to 41.6 in November from 41.7 in October, the lowest since May 2020 and well below the 50 mark that divides expansion from contraction.

The Polish reading rose to 43.4 in November from 42.0 in October, but remained deep in contraction territory.

“(The PMI) reflects the further deceleration of Polish manufacturing,” said Piotr Bielski, director of the economic analysis department of Santander Bank Polska.

“Orders are declining, companies are implementing job reductions ... we should expect the coming months to still be quite negative for Polish manufacturing.”

In Hungary, PMI data calculated under a different methodology by the country’s Association of Logistics, Purchasing and Inventory Management (MLBKT) showed growth in the sector, although at a slower rate than in the previous month.

The seasonally-adjusted Purchasing Managers’ Index dropped to 54.7 in November from 56.4 in October.

“It is quite surprising to again see the PMI above 50, it suggests that nowadays the only silver lining for the Hungarian economy is manufacturing,” said Peter Virovacz, senior economist at ING in Budapest.

“Actually we can see the same story in the third quarter GDP data where the only green shoot came from industry, ...(which was) able to grow on a quarterly basis.”

Hungary’s economy grew by an annual 4.0% in the third quarter, according to final unadjusted data, the same as the preliminary figure, the Central Statistics Office (KSH) said on Thursday. (Reporting by Alan Charlish Editing by Mark Potter)