CEE ECONOMY Central Europe PMIs end 2021 on a high despite uncertainties

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Jan 3 (Reuters) - Central European manufacturing sentiment ended 2021 on a strong note, surveys showed on Monday, with output and orders rising the most in months, although supply snags and rising prices spelled uncertainty for the year ahead.

IHS Markit's Purchasing Managers' Indices (PMI) in the Czech Republic and Poland extended gains already posted in November.

The Polish survey rose to 56.1 in December, above forecasts and up from 54.4 in November, remaining well above the 50.0 line that separates growth from contraction.

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Czech PMI rose to 59.1, the highest in four months, from 57.1 in November and continued a bounce from an 11-month low in October. New orders were the highest since August. read more

Hungarian PMI, published by the Association of Logistics, Purchasing and Inventory Management, jumped to 64.8 in December from 52.2 in November, with new orders up sharply.

Manufacturing faced constraints in the second half of 2021 as global supply chain issues, most evident in chip shortages that hit car sector production, and rising material costs weighed on central Europe's economic recovery.

Pressures look set to persist into 2022. Hungary's survey showed the strongest December increase in purchase prices since 1995. In Poland, firms built up supplies, with the survey showing its sharpest rise in input inventories to date.

"The end of 2021 brought... a very strong improvement in the PMI index," Monika Kurtek, chief economist at Bank Pocztowy in Warsaw, said in a note.

"Although its high growth seems to be positive information, the structure still looks worrying. In particular, this applies to inventories, bought and stored by companies."

Price pressures for firms also pointed to consumer inflation remaining high, she said.

Central banks in Poland, Hungary and the Czech Republic have all been lifting interest rates at a sharp rate to tackle surging inflation. Headline inflation has hit 6% in the Czech Republic and above 7% in Poland and Hungary.

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Reporting by Jason Hovet in Prague, Anna Koper in Warsaw and Krisztina Than in Budapest; Editing by Alexander Smith

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